Sample Questions

SEBI Investor Awareness Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 In an Offer for Sale, where do the funds from investors go?

  • A. To the existing shareholders selling the shares Correct Answer
  • B. To the government as tax
  • C. To a pool for future investment
  • D. To the company for its use
Explanation:
In an Offer for Sale, existing shareholders sell their holdings, and the funds go to these sellers, not the company.

Marks: 1

Q2 What do Equity Shares represent?

  • A. Ownership in a company Correct Answer
  • B. A financial instrument whose value depends on another asset
  • C. Money borrowed by a company
  • D. A pool of money from many investors
Explanation:
Equity Shares, or shares, represent a share of ownership in a company.

Marks: 1

Q3 What is one of the listed Obligations of Investors regarding paying margins?

  • A. Pay them whenever convenient
  • B. Pay margins in time Correct Answer
  • C. Avoid paying margins
  • D. Delay paying margins
Explanation:
Paying margins in time is listed as an Obligation.

Marks: 1

Q4 What is 'Liquidity Risk' in fixed-income bond investing?

  • A. The risk that water damage destroys bond certificates
  • B. The risk that an investor holding a bond cannot sell it quickly in the secondary market at a fair market price due to lack of active buyers Correct Answer
  • C. The risk that interest rates will be cut by the central bank
  • D. The risk that inflation will drop to zero
Explanation:
Liquidity risk occurs when secondary market trading in a specific corporate bond is thin. An investor needing urgent cash may be forced to sell at a steep discount to fair value.

Marks: 1

Q5 What do Depositories do in the securities market?

  • A. Publish financial results of companies
  • B. Provide loans against securities
  • C. Execute trades on behalf of investors
  • D. Hold securities of investors in dematerialized/electronic form Correct Answer
Explanation:
Depositories are institutions that hold securities of investors in dematerialized/electronic form.

Marks: 1

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