Question 1
Initial Public Offering (IPO) and Follow-on Public Offering (FPO) are functions of the:
The Primary Market is where new securities are issued for the first time (New Issue Market). IPOs (first sale) and FPOs (subsequent sale by existing companies) allow companies to raise fresh capital directly from investors.
Question 2
Which of the following instruments is regulated by SEBI?
SEBI regulates the securities market, which includes corporate bonds, shares, and mutual funds. G-Secs are primarily regulated by RBI. Currency is RBI's domain. Bank FDs are regulated by RBI.
Question 3
The primary function of NSDL (National Securities Depository Limited) and CDSL is to:
NSDL and CDSL are Depositories. They hold securities (shares, debentures) in electronic form to facilitate paperless trading and settlement.
Question 4
What is the "Green Shoe Option" in an IPO?
A Green Shoe Option (Over-allotment Option) allows the issuer to authorize underwriters to sell additional shares (usually up to 15%) if demand is high, helping to stabilize the post-listing price.
Question 5
In the context of IPO applications, what does "ASBA" stand for?
ASBA is a process where the IPO application money remains blocked in the investor's bank account and is debited only if shares are allotted.
Question 6
India currently follows which settlement cycle for equity spot markets (as initiated in phases from 2023)?
India moved from T+2 to T+1 settlement cycle (Trade date + 1 day) for equities, making it one of the fastest settlement systems globally. SEBI is also testing optional T+0.
Question 7
Funds raised through "Green Bonds" must be utilized exclusively for:
Green Bonds are debt instruments specifically earmarked to raise money for climate and environmental projects like renewable energy, clean transportation, and water management.
Question 8
Regarding Sovereign Gold Bonds (SGBs), which of the following statements about taxation is correct?
For SGBs, the interest (2.5% p.a.) is taxable. However, capital gains arising on redemption of the bond (held till maturity) are exempt from tax for individual investors. No TDS is deducted on interest.
Question 9
In the "Book Building" process of an IPO, the "Cut-off Price" refers to:
The Cut-off Price is finalized by the issuer in consultation with the Merchant Bankers based on the bids received. Investors bidding at the "Cut-off" agree to pay whatever final price is discovered.
Question 10
Companies listed on the "SME Exchange" platform are required to migrate to the Main Board if their paid-up capital exceeds:
SME Platform listing is for companies with post-issue paid-up capital up to ?25 Crore. If it exceeds this limit, they must migrate to the Main Board.
Question 11
In the context of Primary Market issues (IPOs), what does the "ASBA" mechanism ensure?
Application Supported by Blocked Amount (ASBA) ensures that funds are debited from the investor's account only when shares are actually allotted, allowing them to earn interest on the blocked amount in the interim.
Question 12
The "Green Shoe Option" allows a stabilizing agent to over-allot shares up to what percentage of the issue size?
SEBI guidelines allow the Green Shoe Option (price stabilization mechanism) to be exercised for up to 15% of the total issue size.
Question 13
A "Rights Issue" is an offer of shares to:
A Rights Issue gives existing shareholders the "right" (but not obligation) to buy new shares in proportion to their existing holdings, usually at a discount to the market price.
Question 14
Since January 2016, SEBI has made the ASBA (Application Supported by Blocked Amount) facility mandatory for:
SEBI mandated that all categories of investors (Retail, HNI, QIB) must strictly apply through the ASBA mechanism to improve efficiency and reduce refunds.
Question 15
"Qualified Institutional Placement" (QIP) is a mechanism available only to:
QIP allows listed companies to raise capital quickly from institutional investors without the lengthy regulatory process of a standard public issue.
Question 16
An "Anchor Investor" in an IPO is a Qualified Institutional Buyer (QIB) who:
Anchor Investors are allocated shares one day before the IPO opens to boost confidence. They have a lock-in period (partially 30 days, partially 90 days).
Question 17
An "Indian Depository Receipt" (IDR) is an instrument denominated in which currency?
An IDR is an instrument in the form of a depository receipt created by a Domestic Depository (custodian of securities registered with SEBI) against the underlying equity of issuing company to enable foreign companies to raise funds from the Indian securities market. It is denominated in Indian Rupees.
Question 18
Participatory Notes (P-Notes) are instruments used by:
P-Notes are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly.
Question 19
The "ISIN" (International Securities Identification Number) code is a unique identifier for:
ISIN is a 12-digit alphanumeric code that uniquely identifies a specific security (like equity share, debenture, etc.) admitted in the depository system.
Question 20
Which regulation governs the obligations of listed companies regarding disclosure and transparency?
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) sets out the compliance norms for listed entities to ensure transparency and protect investor interests.
Question 21
What is the effect of the "T+1" settlement cycle in the Indian equity market?
T+1 means settlement occurs on the next working day following the trade day, releasing capital faster and reducing counterparty risk compared to T+2.
Question 22
SEBI-mandated "Circuit Breakers" in the stock market are triggered based on the movement of:
Market-wide circuit breakers are triggered by 10%, 15%, or 20% movement in either BSE Sensex or Nifty 50, leading to a temporary halt in trading.