Financial Market Instruments PYQs — 16 UPSC CSE Previous Year Questions

Question 1

A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called :

Accepted Answer

C. Sustainability Bond

Question 2

Which of the following statements about Real-World Assets (RWA) Tokenization are correct? Tokenization is the process of turning real world assets into digital tokens using blockchain technology. Tokenization of real world assets offers 24×7 access, promoting financial inclusion. Tokenization of real world assets will allow the access to high growth investment opportunities for individuals in India. Select the answer using the code given below:

Accepted Answer

A. 1, 2 and 3

Question 3

Consider the following statements : India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom. India's stock market has grown rapidly in the recent past even overtaking Hong Kong's at some point of time. 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?

Accepted Answer

A. I and II only

Question 4

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

Accepted Answer

C. 1, 2 and 3

Question 5

In India, which of the following can trade in Corporate Bonds and Government Securities ? Insurance Companies Pension Funds Retail Investors Select the correct answer using the code given below :

Accepted Answer

D. 1, 2 and 3

Question 6

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

Accepted Answer

D. 1 and 3 only

Question 7

Consider the following statements : Statement-I : Syndicated lending spreads the risk of borrower default across multiple lenders. Statement-II : The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line. Which one of the following is correct in respect of the above statements ?

Accepted Answer

C. Statement-I is correct, but Statement-II is incorrect

Question 8

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

Accepted Answer

B. 2 and 3 only

Question 9

With reference to the Indian economy, what are the advantages of "Inflation-Indexed Bonds (IIBs)" ? Government can reduce the coupon rates on its borrowing by way of IIBs. IIBs provide protection to the investors from uncertainty regarding inflation. The interest received as well as capital gains on IIBs are not taxable. Which of the statements given above are correct ?

Accepted Answer

A. 1 and 2 only

Question 10

With reference to Convertible Bonds, consider the following statements : As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices. Which of the statements given above is/are correct ?

Accepted Answer

C. Both 1 and 2

Question 11

With reference to India, consider the following statements: Retail investors through demat account can invest in 'Treasury Bills' and 'Government of India Debt Bonds' in primary market. The 'Negotiated Dealing System-Order Matching' is a government securities trading platform of the Reserve Bank of India. The 'Central Depository Services Ltd.' is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange. Which of the statements given above is/are correct?

Accepted Answer

B. 1 and 2

Question 12

Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?

Accepted Answer

D. Participatory Note

Question 13

Consider the following statements : The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments. Treasury bills offer are issued at a discount from the par value. Which of the statements given above is/are correct ?

Accepted Answer

C. 2 and 3 only

Question 14

In India, which of the following is regulated by the Forward Markets Commission?

Accepted Answer

B. Commodities Futures Trading

Question 15

Participatory Notes (PNs) are associated with which one of the following?

Accepted Answer

B. Foreign Institutional Investors

Question 16

Debenture holders of a company are its:

Accepted Answer

B. creditors