These are the most repeated question asked in SET C : Financial Services and Capital Markets SPOM exam for CA Student.
SET-C Paper 9
Financial Service and Capital Market – Repeated Questions
Total Questions
Comprehensive Q&A Collection
Comprehensive Q&A Collection
Study Material
Financial Services & Capital Market
Financial Services & Capital Market
Exam Prep
Repeated Questions Focus
Repeated Questions Focus
1
_____________ Qualified institutional buyer also purchase share one day before IPO opens
ANSWER
Anchor investor
2
______________ Bond …. Principal early……
ANSWER
Putable bonds (pg.no: 6.17)
3
_______ Least preferred exit route for PE
ANSWER
Liquidation
4
Formula of (t.bill)
ANSWER
S-P/P*365 or 360/M * 100
5
Who support blank cheque companies
ANSWER
Institutional Investor
6
__________ Persons collects application on behalf of investor
ANSWER
Registrar and Share transfer agent
7
MIBOR calculated by ___________
ANSWER
NSEIL
8
Pre issue advertisement format
ANSWER
part A of schedule X
9
Lock in period for money market mutual fund
ANSWER
46 Days
10
Zero debt company
ANSWER
NMCE
11
Role of investment banker in private placement
ANSWER
Help clients who prefer to raise capital through private placements
12
Minimum …. Private placement
ANSWER
50-200
13
Functions of clearing house
ANSWER
A clearing house serves as a third-party mediator between a buyer and seller engaged in any financial transaction.
14
FEDAI play role of _______ in financial market
ANSWER
Management of foreign exchange
15
Calculation of annualized yield by using formula
ANSWER
TP – LENDING PRICE / LENDING PRICE * 365/PERIOD * 100
16
Why SOFR not include in premium for credit risk?
ANSWER
Because it reflects unsecured borrowing among banks, which can fluctuate based on economic conditions
17
How many days underwriter honour the commitments from date of closure of unsubscribed issue?
ANSWER
60 days
18
To encourage borrowing and spending situation RBI may
ANSWER
reduce repo rate
19
Spread of price between floor price and cap. In price bond not more than
ANSWER
20%
20
when issue is fully subscribed
ANSWER
90%
21
who can issue certificate of deposit
ANSWER
Bank
22
commercial paper is issued by
ANSWER
Corporates
23
Most successful exit strategy for PE investor
ANSWER
IPO
24
MCX crude oil standard quality is ____ barrels
ANSWER
100 Barrels
25
FIMMDA (Fixed Income Money Market and Derivatives Association of India) was incorporated under
ANSWER
Sec 25 of Companies ACT 1956
26
A fund that is invested to provide long-term support for a particular nonprofit organization or cause in perpetuity such as University, NPO, church, hospital
ANSWER
Endowment funds
27
Rate at which RBI lends to commercial bank
ANSWER
REPO RATE
28
______ PLATFORM where small huge no. Of investor invest in startups
ANSWER
Crowd funding
29
Algorithmic trading is also known as
ANSWER
Black box trading
30
CM-NM-TM
ANSWER
1DAYS,2-14DAYS,15DAYS
31
Participants in capital market
ANSWER
Individuals, financial institutions, insurance companies, commercial banks, businesses, and retirement funds
32
Refer buy back concept from book regarding – All other small points
ANSWER
Refer book
33
Full factoring is also known as
ANSWER
Old line factoring
34
Cross border factoring
ANSWER
TWO factor system
35
In operating lease, right to control use of the asset with
ANSWER
Lessee
36
Why stability in credit ratings is crucial for transition rates?
ANSWER
Ignoring such dependencies may lead to inaccurate assessments of credit risk
37
Explain the concept of rolling returns
ANSWER
Rolling returns represent a method of calculating and analyzing investment performance by averaging returns over different, overlapping time periods. Instead of focusing on a single, fixed time frame, rolling returns provide a more comprehensive view of an investment’s performance by looking at returns across various cycles and removing the potential bias of selecting specific start and end dates.
38
Explain the concept of EL3 (expected loss)
ANSWER
Expected Loss (EL) is a key credit risk parameter which assigns a numerical value between zero and one (a percentage) denoting the expected (anticipated) financial loss upon a credit related event (default, bankruptcy) within a specified time horizon
39
Explain the concept of general partner and LP
ANSWER
The GP manages the business, while LPs primarily provide capital and have limited liability
40
Explain concept of red herring prospectus
ANSWER
A Red Herring Prospectus (RHP) is a preliminary document that a company files with regulatory bodies like SEBI (in India) before an Initial Public Offering
41
_______ Calculates mumbai inter bank overnight rate
ANSWER
CCIL
42
Credit score of B indicates
ANSWER
high risk
43
Subscription list for public issue is to be kept open for
ANSWER
Minimum 3 days
44
Agridex launched on 25.1.20 complies ____ liquid commodities
ANSWER
10 liquid agricultural commodities
45
……….Not a key stakeholder of MCX a listed company
ANSWER
A “key stakeholder” in a listed company like MCX (Multi Commodity Exchange of India) is typically a large shareholder or an entity with significant influence over the company’s operations and decision-making. This could include promoters, major institutional investors (like FIIs or DIIs), or even strategic partners. A small individual investor, while important to the overall market, would not typically be considered a “key stakeholder” in the same sense as these larger entities.
46
Process of altering an index constituent securities known as
ANSWER
Rebalancing
47
Pooling of funds for investment
ANSWER
Mutual fund
48
Revenue BBP shares are tendered
ANSWER
3-5days
49
Refer the concept of factoring
ANSWER
Factoring is a type of finance where businesses sell accounts receivable to a third party, also called a factor, at a discount.
50
Concept of term sheet
ANSWER
A term sheet allows parties to negotiate and ask for clarification on details before a contract is signed
51
Scope and limitations of credit ratings
ANSWER
Recognise that credit ratings provide a risk assessment primarily focused on the entity’s ability to repay debt. They do not cover other investment risks, such as market volatility
52
Calculations of NAV of mutual fund
ANSWER
the overall expense ratio is subtracted from the asset value (Refer AFM TEXT BOOK Question)
53
Concept on basket trading
ANSWER
basket trading lets you invest in a pre-selected group of stocks—called a “basket”—that are handpicked by market experts
54
Evaluation of process of credit rating
ANSWER
Refer book
55
Concept of forfaiting
ANSWER
Forfaiting is a method of trade finance that allows exporters to obtain cash by selling their medium and long-term foreign accounts receivable at a discount to a forfaiter, a specialized finance firm or a department in a bank.
56
Component of camel model
ANSWER
The CAMELS system rates six factors: capital adequacy, asset quality, management, earnings, liquidity, and sensitivity. A rating of 1 is considered the best, and a rating of 5 is considered the worst
57
Features of Zero coupon bonds
ANSWER
Zero-coupon bonds pay no interest, but they’re purchased at a deep discount and repaid at full price. Most zero-coupon bonds are long-term issues. Ten or more years is common. They’re often used to finance a long-range goal such as paying for a child’s college education
58
Difference b/w buy side and sell side
ANSWER
Buy-side analysts work for firms that manage money, such as hedge funds and private equity groups. In contrast, sell-side analysts work for institutions that sell financial products, such as investment banks and brokerages
59
Calculation of HPR
ANSWER
alculating the HPR starts by subtracting the beginning value of an investment from the ending value to arrive at the capital appreciation value, i.e. the capital gain
60
Calculation of strike price
ANSWER
A strike price, also known as an exercise price, is the set price you’ll pay per share for company stock when you exercise your stock options. The strike price is set at the time the options are granted and usually reflects the fair market value (FMV) of the company’s stock on the grant date (refer book)
61
Relationship between credit rating and default probability
ANSWER
Credit ratings provide forward-looking opinions on firms’ credit quality as represented by the debt issuers’ ability to meet their ongoing financial obligations and the likelihood of default. Rating agencies use lettering systems to communicate their assessment of the debt-issuing firms’ creditworthiness
62
Market of short term funds
ANSWER
Money market: Deals with short-term investments such as treasury bills and commercial papers. It focuses on liquidity and stability with lower risk. Capital market: Involves long-term investments like stocks and bonds, offering higher returns but with greater risk.
63
Calculation of float factor
ANSWER
To calculate free float, you take a company’s outstanding shares and subtract its restricted shares. To get the company’s free-float market capitalization, take the free-float number and multiply it by a company’s share price (pg no: 4.22)
64
BECR – lessee point of view
ANSWER
pg no:14.14
65
Calculation of annual expenses of mutual fund
ANSWER
refer book
66
Uses of market index
ANSWER
pg no: 4.24
67
Role of merchant banker
ANSWER
refer book
68
NPO_____ can use to raise funds through stock exchange
ANSWER
Zero Coupon Zero Principal (ZCZP) bond
69
Calculation of intrinsic value and time value of stock
ANSWER
pg no: 7.42
70
Calculation of sharpe ratio
ANSWER
refer book
71
Calculation of lease rent
ANSWER
refer book
72
Calculation of CII AND nominal profit
ANSWER
refer book
73
Problems in factoring
ANSWER
refer book
74
Refer pg no: 5.47
ANSWER
Q.NO: 2
75
Functions of financial market
ANSWER
pg no: 1.7
76
According to levin functions of financial market
ANSWER
pg no: 1.8
77
Advantage of demutualization
ANSWER
pg no: 4.10 & 4.11
78
Investment bank ABC leaders Syndicate for rupees 1000 crore with following structure A bank – 40%, B bank- 35%, C bank- 25%. After offering period rupees 200 crore worth of securities remain unsold primarily from A banks allocated portion. This was fractured as an undivided Syndicate what would be ABC Bank liability for the unsold security
ANSWER
Calculate proportional liability
79
calculation of clean price, first lag, second lag
ANSWER
refer book
80
A company issued 750000 share offer rupees 150 and listed rupees 170 overall allotment option exercised. Stabilizing agent did not buy any shares. 1. how many number of shares remain listed at the end of the 30th day. 2. how many shares can be purchased to ascent deduction in share price
ANSWER
Calculate based on green shoe option
81
Offer document used in the case of a book-built public issue in which all relevant details except that of the price or number of shares being offered is disclosed, is known as: (A) Prospectus (B) Abridged Prospectus (C) Red Herring Prospectus (D) Letter of Offer
ANSWER
(C) Red Herring Prospectus
82
Which of the following is not an intermediary in the capital market? (A) Merchant bankers (B) Underwriters (C) Debenture trustees (D) Venture capitalist
ANSWER
(D) Venture capitalist
83
Purchase and Sale of securities in open market by a central bank is called: (A) Open Market operations (B) Discount Rate Operations (C) Overnight Reverse Repurchase (D) All of the above
ANSWER
(A) Open Market Operations
84
The following is an extract from the draft term-sheet given by VC2: ‘In the event that company issues additional securities at a price less than the current series A preferred conversion price, such conversion price shall be reduced to the price at which the new shares are issued.’ What, in your opinion, does the above language of the term-sheet indicate? (A) Broad-based weighted average anti-dilution protection (B) Narrow-based weighted average anti-dilution protection (C) No anti-dilution protection (D) Full-ratchet anti-dilution protection
ANSWER
(D) Full-ratchet anti-dilution protection
85
Reverse Repo and Repo are defined as (A) Reverse repo is the rate at which commercial banks lend to RBI and Repo is the rate at which RBI lends to Commercial Banks. (B) Reverse repo is the rate at which commercial banks borrow from RBI and Repo is the rate at which RBI borrows from Commercial Banks. (C) Reverse repo is the rate at which commercial banks lend to other commercial banks and Repo is the rate at which RBI lends to Government. (D) Repo is the rate at which commercial banks lend to government and reverse repo is the rate at which RBI lends to Commercial Banks.
ANSWER
(A) Reverse repo is the rate at which commercial banks lend to RBI and Repo is the rate at which RBI lends to Commercial Banks.
86
Which one of the following is not a Credit Rating Agency? (A) Fitch (B) Credit Analysis & Research Ltd. (C) CIBIL (D) Standard & Poor
ANSWER
(C) CIBIL
87
Which among the following is true in case of rolling returns? (a) It simply measures the performance of the growth option NAV from the start date to today’s date, annualized. (b) Measure the return from the start date to next date, from next to next-to-next date and so on and take the average of all these observations. (c) measure the return from the start date to next week, from next week to next-to-next week and so on and take the average of all these observations. (d) All of the above
ANSWER
(d) All of the above
This is for last day revision only do read the book once before appearing for the SPOM exam . Good Luck
