Question 1

Which of the following is NOT a function typically performed by a Merchant Banker?

Accepting Demand Deposits (Savings/Current) from the publicLoan SyndicationManaging Public Issues (IPOs)Corporate Advisory Services

View Explanation

Merchant Bankers are capital market intermediaries regulated by SEBI. Unlike commercial banks, they are not allowed to carry out core banking functions like accepting demand deposits from the general public.

Question 2

Only a "Category I" Merchant Banker registered with SEBI can act as a:

Portfolio Manager.Advisor to an Issue.Lead Manager to an Issue.Underwriter.

View Explanation

SEBI regulations classify Merchant Bankers into categories. Only Category I Merchant Bankers are authorized to act as Lead Managers for public issues (IPOs/FPOs). Other categories have restricted roles.

Question 3

Regarding "IPO Grading" in India, which statement is correct?

It is optional and assesses the "fundamentals" of the issuer relative to other listed peers.It assesses the "price" of the IPO.It is mandatory for all IPOs.It guarantees the returns from the IPO.

View Explanation

SEBI made IPO Grading optional in 2014. Grading (on a scale of 1 to 5) reflects the assessment of the company's fundamentals, not the issue price or potential returns.

Question 4

The process of "Reverse Book Building" is primarily used for:

Bonus IssueInitial Public Offering (IPO)Rights IssueDelisting of shares from stock exchanges

View Explanation

Reverse Book Building is the mechanism used for price discovery when a company decides to delist its shares from the stock exchanges and buy back shares from the public.

Question 5

The "Due Diligence Certificate" submitted to SEBI before a public issue implies that:

The company will definitely make a profit.The Merchant Banker guarantees the share price.The Merchant Banker has verified the contents of the prospectus and found them to be true, fair, and adequate.The RBI has approved the issue.

View Explanation

It serves as a declaration by the Lead Manager that they have exercised reasonable care in verifying the disclosures made in the offer document.

Question 6

A Merchant Banker's registration with SEBI is valid for:

3 Years1 YearPermanent (unless suspended/cancelled)5 Years

View Explanation

SEBI amended regulations to grant permanent registration to intermediaries like Merchant Bankers, subject to payment of fees and compliance.

JAIIB Quiz

Quiz Finished!