Securities Market and Public Issuance MCQs for SEBI Grade A / RBI Grade B 2020 Exam Part - 9

 Hello Readers,

                            Securities Market and Financial Awareness MCQs for the upcoming SEBI Grade A and RBI Grade B examination. It will be also helpful your your banking examination such as IBPS, SBI PO, IRDAI, etc. For all MCQs Archive CLICK HERE 





Q1. Market Capitalization aka m-cap of a stock fluctuate by

A. Volume of shares
B. Changes in price of the stock
C. Changes in the market index
D. Liquidity in the market

Explanation: (B) Market Capitalization or market cap of a company is the number of shares outstanding multiplied by the market price per share.

  • Market cap—or market capitalization—refers to the total value of all a company's shares of stock.
  • For example: Dixon Technologies Ltd current share price Rs. 8,815 * 11,570,141 shares outstanding, then M-Cap is Rs. 10,199 Cr. So, any change in the stock price will impact the market capitalization of the  company.

Q2. What is  the process known as when a company makes either a fresh issue of shares for the first time to the public?

A. FPO
B. IPO
C. Right Issues
D. None of the above

Explanation: (B) IPO Stands for Initial Public Offerings. 

  • Initial public offering is the process by which a private company can go public by sale of its stocks to general public. It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.
  •  Initial public offer (IPO): When an unlisted company makes either a fresh issue of shares or convertible securities or offers its existing shares or convertible securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer’s shares or convertible securities on the Stock Exchanges. 
  • For Example: Recently Likhitha Infrastructure IPO launched with 5,100,000 Eq Shares of ₹10(aggregating up to ₹61.20 Cr) at a price band of Rs. 116 to Rs. 120 per equity share.

Q3. What does I stands for in QIP?

A. Individual
B. Investor
C. Institutional
D. Increase

Explanation: (C) QIP stands for Qualified Institutions Placement.

  • Qualified institutions placement (QIP): When a listed issuer issues equity shares or non-convertible debt instruments along with warrants and convertible securities other than warrants to Qualified Institutions Buyers only, in terms of  Page 4 of 32 provisions of Chapter VIII of SEBI (ICDR) Regulations, 2009, it is called a QIP. 
  • Here, ICDR stands for Issue of Capital and Disclosure Requirements.

Q4. Retail individual investor is an investor who applies or bids for securities of or for a value of not more than Rs. ________?

A. Rs. 2.5 Lakh
B. Rs. 5 Lakh
C. Rs. 2 Lakh
D. Rs. 2.75 Lakh

Explanation: (C)  “Retail individual investor” means an investor who applies or bids for securities for a value of not more than Rs. 2,00,000. 

  • Sebi law defines retail individual investor as an investor who applies or bids for securities of or for a value of not more than Rs 2,00,000 in an IPO and buys or holds shares worth less than Rs 2,00,000 in a stock. There is no such limit in commodities to define a retail investor.
  • In October 2010 Securities and Exchange Board of India (SEBI) today doubled the investment limit for retail investors in an initial share sale offer to Rs2 lakh. Way back in 2005, the limit for retail investors was raised from Rs50,000 to Rs1,00,000 in public issues.

Q5. What does B stands for in ASBA?

A. Bank
B. Blocked
C. Bond
D. Band

Explanation: (B) ASBA stands for APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (ASBA).

  • ASBA (Applications Supported by Blocked Amount) is a process developed by India's Stock Market Regulator SEBI for applying to IPOs, Rights issue, FPS etc. In ASBA, an IPO applicant's bank account doesn't get debited until shares are allotted to them. ASBA means “Applications Supported by Blocked Amount”.
  • As an investor, if you apply through ASBA, your money gets debited from your bank account only if your application is selected for allotment. It is refunded to your bank account if you do not get the IPO issue or the issue has been withdrawn. From 2016 onwards, the SEBI has directed that it is mandatory to fill an ASBA form if you wish to invest in IPO.


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