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Financial Markets and Intermediaries

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Questions and Answers

What is the primary purpose of financial markets?

To create a surplus of funds

To allocate financial resources efficiently (correct)

To limit economic activity

To restrict access to funds

Who are the users of funds in the financial markets?

Mutual funds and insurance companies

Investors and lenders

Households, businesses, and governments (correct)

Banks and financial institutions

What role do intermediaries like banks and mutual funds play in the financial markets?

They limit the availability of funds

They channelize surplus funds from lenders to users (correct)

They restrict economic activity

They consume surplus funds

Why is aggregation of funds from a large number of investors important in financial markets?

To make funds available for productive economic activity Signup and view all the answers

What does an efficient financial market ensure regarding the transfer of funds?

Attractive costs for savers to save and lend, and for users to borrow funds Signup and view all the answers

Why are providing liquidity and exit options important functions of financial markets?

To allow participants to review their funding decisions given new information Signup and view all the answers

What is the main focus of financial market regulations and regulators?

Streamlining fund transfer activities Signup and view all the answers

According to the SCRA, 1956, which of the following is NOT included in the definition of securities?

Gold receipts Signup and view all the answers

What is the role of securities markets in the economy?

Allocation of savings to investments Signup and view all the answers

Which entity possesses the authority to declare new instruments as securities according to the text?

Central Government Signup and view all the answers

What is the purpose of decoupling savings from investments through securities markets?

To alleviate constraints on savings and investments Signup and view all the answers

Which type of instrument is an 'Electronic Gold Receipt' as per the Securities and Exchange Board of India?

Electronic receipt for physical gold deposits Signup and view all the answers