SEBI and Capital Markets MCQ

Question 1

Consider the following statements regarding SEBI:
1. SEBI was initially constituted as a non-statutory body on 12 April 1988.
2. SEBI acquired statutory status on 30 January 1988.
3. SEBI was established as a statutory body in 1992.
4. The preamble to the SEBI Act refers to protection of investors' interests, development of the securities market and regulation of that market.
Which of the statements given above are correct?

Accepted Answer

Statements 1, 3 and 4 are correct. SEBI began as a non-statutory body on 12 April 1988 and became a statutory body under the SEBI Act, 1992; hence statement 2 is wrong because it shifts statutory status to 1988. The Act's preamble frames SEBI's investor-protection, market-development and market-regulation role.

Question 2

Consider the following statements regarding market infrastructure institutions:
1. Market infrastructure institutions include stock exchanges and depositories that facilitate trading, clearing and settlement of securities.
2. SEBI regulates MIIs to maintain transparency, investor protection and financial stability.
3. Clearing corporations transfer securities from seller to buyer in demat accounts.
Which of the statements given above are correct?

Accepted Answer

Statement 1 is true because SEBI Investor identifies stock exchanges and depositories as MIIs that facilitate trading, clearing and settlement. Statement 2 is true because SEBI regulates MIIs for transparency, investor protection and financial stability. Statement 3 is false: the clearing corporation verifies funds and securities availability, while the depository transfers securities from seller to buyer.

Question 3

Consider the following statements regarding foreign institutional investment and market access:
1. SEBI's functions include registering and regulating foreign institutional investors.
2. SEBI's functions include registering and regulating custodians of securities.
3. Foreign portfolio investors are registered by the Reserve Bank of India alone, with no SEBI role under the SEBI Act.
4. Custodians of securities are among the intermediaries mentioned in SEBI's statutory functions.
Which of the statements given above are correct?

Accepted Answer

Statements 1, 2 and 4 are correct. The SEBI Act lists registration and regulation of foreign institutional investors and custodians of securities among SEBI's functions. Statement 3 is false because it denies SEBI's expressly stated role.

Question 4

Consider the following statements regarding investor grievance redressal:
1. For a complaint against a listed company or SEBI-registered intermediary, the investor should first approach the concerned company or intermediary.
2. If a complaint is lodged, the entity is required to file an Action Taken Report with SEBI within 30 days of receipt of the complaint.
3. SCORES does not allow investors to track complaint status online.
Which of the statements given above are correct?

Accepted Answer

Statements 1 and 2 are correct: SEBI investor material says the investor should first approach the concerned entity and that entities must file an ATR within 30 days. Statement 3 is false because SCORES allows online follow-up and tracking.

Question 5

Consider the following statements regarding mutual funds:
1. NAV stands for Net Asset Value.
2. NAV represents the per-unit market value of securities held in a mutual fund's portfolio after subtracting liabilities.
3. A larger AUM necessarily indicates strong past performance of a mutual fund.
Which of the statements given above are correct?

Accepted Answer

Statement 1 is true because NAV stands for Net Asset Value. Statement 2 is true because NAV is the per-unit market value of the mutual fund portfolio after liabilities are subtracted. Statement 3 is false: SEBI Investor cautions that a larger AUM does not necessarily indicate strong past performance.

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