Stock Exchange – Structure, Functions, SEBI, Operators, Terms Quiz - ICSE Class 12 Commerce

Free practice quiz: Stock Exchange – Structure, Functions, SEBI, Operators, Terms (ICSE Class 12 Commerce). 51 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

Sample questions

1. Which of the following regulatory bodies is primarily responsible for the oversight and regulation of the Indian securities market, including the stock exchanges?

   1. Reserve Bank of India (RBI)
   2. Securities and Exchange Board of India (SEBI)
   3. Insurance Regulatory and Development Authority of India (IRDAI)
   4. Competition Commission of India (CCI)
   Show answer

   Answer: B. Securities and Exchange Board of India (SEBI)

   SEBI was established by the Government of India to regulate the securities market in India. Its primary role is to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

2. The process by which a company first offers its shares to the public is known as:

   1. Secondary offering
   2. Rights issue
   3. Initial Public Offering (IPO)
   4. Merger and acquisition
   Show answer

   Answer: C. Initial Public Offering (IPO)

   An IPO is the first time a private company offers its stock to the public, allowing it to raise capital and become a publicly traded entity.

3. The term 'insider trading' refers to:

   1. Trading of securities by executives of the company they work for.
   2. Trading of securities based on material, non-public information about the company.
   3. Trading of securities that are listed on international exchanges.
   4. Trading of securities at a price significantly below the market value.
   Show answer

   Answer: B. Trading of securities based on material, non-public information about the company.

   Insider trading is illegal as it gives an unfair advantage to individuals who possess privileged information, undermining market fairness.

4. The 'underlying asset' for a stock option contract is typically:

   1. A bond issued by the same company.
   2. The common stock of a particular company.
   3. A currency exchange rate.
   4. A commodity like gold or oil.
   Show answer

   Answer: B. The common stock of a particular company.

   A stock option gives the buyer the right, but not the obligation, to buy or sell a specific stock at a predetermined price (the strike price) on or before a certain date. The stock itself is the underlying asset.

5. The 'book building' process in an IPO is used for:

   1. Determining the underwriting fees.
   2. Discovering the market price for shares by collecting bids from investors.
   3. Listing the company's shares on the stock exchange.
   4. Registering the company's corporate governance structure.
   Show answer

   Answer: B. Discovering the market price for shares by collecting bids from investors.

   Book building allows the issuer to gauge investor demand and set an appropriate IPO price by inviting bids within a price band.

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