Test Your NISM-Series-12: Securities Markets Foundation Mock Tests Knowledge in 5 Minutes

1. What is the primary purpose of the securities markets?

A. To channel capital from investors to businesses and government. B. To facilitate short-term borrowing between banks. C. To regulate foreign exchange transactions. D. To manage public debt auctions exclusively.

2. According to the Securities Contracts (Regulation) Act, 1956, which of the following is included in the definition of "securities"?

A. Investment in a provident fund. B. Unit linked insurance policy. C. Shares, scrips, stocks, bonds, debentures. D. A fixed deposit receipt issued by a bank.

3. What is a key feature of a security representing the exchange of money between two parties?

A. Its terms are determined solely by the investor. B. It must always be held until maturity. C. It provides a platform for savers to convert savings into financial assets with a return. D. It is typically a one-to-one, non-transferable transaction.

4. What is the fundamental difference between a bank deposit and a certificate of deposit (CD) as described?

A. A bank deposit is transferable, while a CD is not. B. Interest rates are fixed for CDs but variable for bank deposits. C. CDs are regulated by the central bank, but bank deposits are not. D. A bank deposit is a transaction between two parties, while a CD is a standard, transferable security.

5. Which market segment is where issuers raise capital by issuing securities for the first time?

A. Primary market. B. Money market. C. Secondary market. D. Currency market.

6. What is the primary role of the secondary market?

A. To facilitate trade in already-issued securities. B. To create new financial assets for issuers. C. To determine the initial price of new securities. D. To directly channel savings to businesses.

7. Which of the following are the main building blocks of a securities market?

A. Stock Exchanges and Depositories. B. Primary and Secondary Markets. C. Investors and Issuers. D. Regulators and Intermediaries.

8. Who facilitates the interaction between investors and borrowers in the securities market?

A. Stock Exchanges. B. Issuers. C. Financial Intermediaries. D. Regulators.

9. Retail investors are described as individuals who invest money on their personal account. What distinguishes institutional investors?

A. They do not require professional advice for investing. B. They only invest in debt securities. C. They are individuals who invest large sums. D. They are organisations that invest large sums and employ specialised knowledge.

10. Which statement is true about the investment approach of institutional investors?

A. They invest only in primary market issues. B. They do not use intermediaries for transactions. C. They manage returns and risk through formal processes for evaluation, monitoring, and risk management. D. They primarily rely on fixed-income products.