Capital Markets & Investment MCQs for UPSC Prelims

With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?

1. A It is the investment through capital instruments essentially in a listed company.
2. B It is a largely non-debt creating capital flow.
3. C It is the investment which involves debt-servicing.
4. D It is the investment made by foreign institutional investors in the Government securities.

Consider the following statements : Statement I : As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders. Statement II : Bondholders are lenders to a company whereas stockholders are its owners. Statement III : For repayment purpose, bondholders are prioritized over stockholders by a company. Which one of the following is correct in respect of the above statements?

1. A Both Statement II and Statement III are correct and both of them explain Statement I
2. B Both Statement I and Statement II are correct and Statement I explains Statement II
3. C Only one of the Statements II and III is correct and that explains Statement I
4. D Neither Statement II nor Statement III is correct

Consider the following: 1. Exchange-Traded Funds (ETF) 2. Motor vehicles 3. Currency swap Which of the above is/are considered financial instruments?

1. A 1 only
2. B 2 and 3 only
3. C 1, 2 and 3
4. D 1 and 3 only

With reference to 'IFC Masala Bonds', sometimes seen in the news, which of the statements given below is/are correct? 1. The International Finance Corporation, which offers these bonds, is an arm of the World Bank. 2. They are the rupee-denominated bonds and are a source of debt financing for the public and private sector. Select the correct answer using the code given below.

1. A 1 only
2. B 2 only
3. C Both 1 and 2
4. D Neither 1 nor 2

With reference to Non-Fungible Tokens (NFTs), consider the following statements: 1. They enable the digital representation of physical assets. 2. They are unique cryptographic tokens that exist on a blockchain. 3. They can be traded or exchanged at equivalency and therefore can be used as a medium of commercial transactions. Which of the statements given above are correct?

1. A 1 and 2 only
2. B 2 and 3 only
3. C 1 and 3 only
4. D 1, 2 and 3

Consider the following statements : I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom. II. India's stock market has grown rapidly in the recent past even overtaking Hong Kong's at some point of time. III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard. Which of the statements given above are correct?

1. A I and II only
2. B II and III only
3. C I and III only
4. D I, II and III

Consider the following statements: 1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India. 2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs). 3. In India, Stock Exchanges can offer separate trading platforms for debts. Which of the statements given above is/are correct?

1. A 1 and 2 only
2. B 3 only
3. C 1, 2 and 3
4. D 2 and 3 only

Consider the following statements: 1. In India, credit rating agencies are regulated by Reserve Bank of India. 2. The rating agency popularly known as ICRA is a public limited company. 3. Brickwork Ratings is an Indian credit rating agency. Which of the statements given above are correct?

1. A 1 and 2 only
2. B 2 and 3 only
3. C 1 and 3 only
4. D 1, 2 and 3