10 Questions
What type of market is classified as a market where debt and stocks are traded with a maturity period of more than a year?
Capital markets
What type of market is classified as a market where securities with less than one year maturity are traded?
Money market
Who are the major suppliers of trading instruments in capital markets?
Government and corporations
What type of market is classified as a market where transactions are done through computers and telephones without a specific location?
Over the counter markets
What type of market is classified as a market where new securities are issued by corporations to raise funds?
Primary markets
What is added to the intrinsic value of an option to calculate its price?
Exercise price of option
What type of exchange members buy and sell only for their personal account?
Non-investment traders
Where can financial institutions sell bonds swapped for loans?
Secondary markets
What function was not entrusted to the Securities and Exchange Board of India?
Regulation of stock prices
What type of market is classified as a market where existing securities are traded?
Secondary markets
Study Notes
Stock Market Indices
- The FTSE 100 index measures stock market performance in the United Kingdom.
- The SENSEX includes 30 companies.
Derivatives
- A derivative contract is a contract between a buyer and a seller entered into today regarding a transaction to be fulfilled at a future point in time.
- The value of a derivative fluctuates with the price of the underlying contract.
- Forward contracts, future contracts, and option contracts are types of derivative contracts.
Indian Stock Market
- The NIFTY and SENSEX are calculated on the basis of free-float capitalization.
- The first computerized online stock exchange in India was National Stock Exchange (NSE).
Options
- If the strike price is more than the spot price of the asset, the call option is said to be "out of the money".
- Break-even of a put option occurs when the spot price is equal to the strike price plus premium.
- Time value of a call option before expiry date is intrinsic value.
Currency Markets
- A spot exchange rate is the rate of exchange between two currencies for immediate delivery.
- A forward exchange rate is the rate of exchange between two currencies prevailing today for future delivery.
Mutual Funds
- Entry load is not allowed in mutual funds in India, while exit load is allowed in some cases.
Depository
- A depository reduces the share transfer time to the buyer, reduces the risk of stolen, fake, forged shares, and eliminates stamp duty on transfer of shares in dematerialized form.
Markets
- Primary markets are where new securities are issued by corporations to raise funds.
- Secondary markets are where securities are traded among investors.
- Money markets are where debt securities with less than a year's maturity are traded.
- Capital markets are where debt and stocks are traded and the maturity period is more than a year.
Miscellaneous
- An over-the-counter (OTC) market is where transactions are done through computers and telephones without a specific location.
- Professional traders are exchange members who only buy and sell for their personal account.
Test your knowledge of stock markets, indices, and finance-related concepts with this quiz. Questions cover various topics, including the FTSE 100 index, Sensex, and Nifty.
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