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Financial Markets MCQ — 96 Practice Questions with Answers

Financial Markets is a Indian Economy topic in the RAS/RPSC syllabus. This page gathers exam-style Financial Markets multiple-choice questions with correct answers and explanations, so aspirants can test recall and revise frequently examined concepts.

Practice 96 Financial Markets multiple-choice questions with detailed answers and explanations. Ideal for RAS/RPSC exam preparation.

96 Questions Indian Economy

Reviewed by: Aspirant Academy Editorial Team

Practice Questions

Q1. Consider the following statements: 1. Treasury bills are zero-coupon securities. 2. Treasury bills pay no interest. 3. Treasury bills are issued at a discount and redeemed at face value at maturity. Which of the statements given above are correct?

A 1 and 2 only
B 1 and 3 only
C 2 and 3 only
D 1, 2 and 3 Correct

Explanation

All three statements are true. RBI states that Treasury bills are zero-coupon securities, pay no interest, and are issued at a discount while being redeemed at face value on maturity.

Q2. Consider the following statements: 1. Equity shares represent a share of ownership in a company. 2. Debt securities represent money borrowed by a company or institution from an investor and must be repaid. 3. Derivatives are financial instruments whose value is independent of any other asset. Which of the statements given above are correct?

A 1 and 3 only
B 2 and 3 only
C 1 and 2 only Correct
D 1, 2 and 3

Explanation

Statement 1 is correct: equity shares represent ownership. Statement 2 is correct: debt securities represent borrowed money that must be repaid. Statement 3 is incorrect because derivatives derive value from another asset such as shares, debt securities or commodities.

Q3. Consider the following statements: 1. BSE Ltd. was established in 1875. 2. BSE is Asia's first stock exchange. 3. BSE provides trading in equity, debt instruments, derivatives and mutual funds. Which of the statements given above are correct?

A 1 and 2 only
B 1, 2 and 3 Correct
C 2 and 3 only
D None of the above

Explanation

All three statements are correct. BSE's corporate profile says it was established in 1875, is Asia's first stock exchange, and provides trading in equity, debt instruments, derivatives and mutual funds.

Q4. Consider the following statements: 1. Capital Indexed Bonds link the principal to an accepted inflation index. 2. A 5-year Capital Indexed Bond was first issued in December 1997 and matured in 2002. 3. Inflation Indexed Bonds protect both coupon flows and principal amounts against inflation. 4. Inflation Indexed Bonds linked to WPI were first issued in India in June 2003. Which of the statements given above are correct?

A 1 and 4 only
B 2 and 3 only
C 1, 2 and 3 only Correct
D 1, 2, 3 and 4

Explanation

Statements 1, 2 and 3 are correct. Statement 4 is incorrect: WPI-linked Inflation Indexed Bonds were issued in India in June 2013, not June 2003.

Q5. Consider the following statements: 1. Open Market Operations are conducted by RBI through sale or purchase of corporate shares. 2. When RBI sells securities under Open Market Operations, it sucks out rupee liquidity from the market. 3. When liquidity conditions are tight, RBI may buy securities from the market to release liquidity. Which of the statements given above are correct?

A 1 and 2 only
B 1 and 3 only
C 2 and 3 only Correct
D 1, 2 and 3

Explanation

Statements 2 and 3 are correct. RBI explains that selling securities sucks out rupee liquidity, while buying securities releases liquidity when conditions are tight. Statement 1 is false because OMOs are sale or purchase of G-Secs, not corporate shares.

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Frequently Asked Questions

How many Financial Markets MCQ questions are available?
There are 96 Financial Markets practice MCQs available on Aspirant Academy, with detailed answers and explanations for each question.
Are answers and explanations provided for Financial Markets MCQs?
Yes, every Financial Markets question comes with the correct answer and a detailed explanation to help you understand the underlying concept.
How is Financial Markets relevant to the RAS/RPSC exam?
Financial Markets falls under the Indian Economy section of the RAS/RPSC syllabus. It is a frequently tested area and regular practice with these MCQs will strengthen your preparation.
Can I practice Financial Markets questions in Hindi?
Yes, Aspirant Academy offers bilingual support. You can practice Financial Markets MCQs in both English and Hindi, including questions, options, and explanations.

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