Chapter 1.

1. Which of the following is NOT a part of the Primary Market?

(a) Merchant Bankers
(b) Mutual Funds
(c) Exchanges
(d) Registrars and Transfer Agents
2. An active ________ promotes the growth of the primary market and capital formation.
(a) secondary Market
(b) bullion market
(c) money market
(d) forex market
3. _______________ aims at streamlining settlement process by transfer of ownership of
securities
electronically by book entry without making the securities move from person to person.
(a) Companies Act, 1956
(b) Depositories Act, 1996
(c) SEBI Act, 1992
(d) SCRA, 1956
4. ________ has powers to register and regulate all market intermediaries in the securities
market
and also to penalize them.
(a) RBI
(b) Depositories
(c) SEBI
(d) IRDA
5. A financial market consists of investors (buyers of securities), borrowers (sellers of
securities), intermediaries and regulatory bodies.
a) True
b) False
6. The capital market has two interdependent and inseparable segments, the new issuers
____________ and stock _____________.
a) Primary Market
b) Secondary Market

c) Both of the above

7. ____________ market is used by issuers for raising fresh capital.
a) Primary Market
b) Secondary Market
c) Both of the above
d) Non of the above
8. The investors by making initial public offers or rights issues or offers for sale of equity or
debt.
a) True
b) False
9. The secondary market provides liquidity to these instruments
a) True
b) False
10. The secondary market provides liquidity to these instruments, through trading and
settlement on the stock exchanges.
a) True
b) False
11. An active secondary market promotes the growth of the primary market and capital
formation, since the investors in the primary market are assured of a continuous market
where they have an option to liquidate their investments.
a) True
b) False
12. The major players in the primary market are the merchant bankers, mutual funds,
financial institutions, foreign institutional investors (FIIs) and individual investors.
a) True
b) False
13. In the secondary market, there are the stock exchanges, stock brokers, the mutual funds,
financial institutions, foreign institutional investors (FIIs), and individual investors.
a) True
b) False

14. The Registrars and Transfer Agents, Custodians and Depositories are capital market
intermediaries which provide important infrastructure services to both the primary and
secondary markets.
a) True
b) False
15. The securities market transactions are subject to regulations under the four main
legislations
a) the Securities and Exchange Board of India Act, 1992;
b) the Securities Contracts (Regulation) Act, 1956;
c) the Depositories Act, 1996 ; and
d) certain provisions of the Companies Act, 1956.
e) All of the above
16. The SEBI Act, 1992 establishes SEBI with statutory powers for,
a) protecting the interests of investors in securities,
b) promoting the development of the securities market, and
c) regulating the securities market.
d) All of the above
17. SEBI has full autonomy and authority to regulate and develop an orderly securities
market.
a) True
b) False
18. It gives central government / SEBI regulatory jurisdiction over (a) stock exchanges
through a process of recognition and continued supervision, (b) contracts in securities,
and (c) listing of securities on stock exchanges
a) True
b) False
19. As a condition of recognition, a stock exchange complies with prescribed conditions from
the central government
a) True
b) False
20. Organized trading activity in securities takes place on a specified recognized stock
exchange
a) True
b) False

21. The Act has made the securities of all companies freely transferable in the depository
mode, restricting the companys right to use discretion in effecting the transfer of
securities
a) True
b) False
22. It deals with issue, allotment and transfer of securities and various aspects relating to
company management.
a) True
b) False
23. It also regulates underwriting, the use of premium and discounts on issues, rights and
bonus issues, payment of interest and dividends, supply of annual report and other
information.
a) True
b) False
24. The activities of these agencies are coordinated by a High Level Committee on Capital
Markets.
a) True
b) False
25. The powers of the DEA under the SCRA are also con-currently exercised by SEBI.
a) True
b) False
26. The SEBI Act and the Depositories Act are mostly administered by SEBI.
a) True
b) False
27. The rules under the securities laws are framed by government and regulations by SEBI.
a) True
b) False
28. Which of the following is NOT a part of the Primary Market?
a) Merchant Bankers
b) Mutual Funds
c) Exchanges
d) Registrars and Transfer Agents