Quiz On Capital Market: Trivia Test!

1. The first stock exchange in the Philippines was established in the year _________.

1972

1917

1927

1920

The correct answer is 1927. This was the year when the first stock exchange in the Philippines was established.

Explanation

The correct answer is 1927. This was the year when the first stock exchange in the Philippines was established.

2. It is a time draft drawn on and accepted by a bank.

Banker's Acceptance

Certificate of Deposit

Repurchase Agreement

Treasury Bill

A banker's acceptance is a time draft, which is a type of financial instrument that is drawn on and accepted by a bank. It is commonly used in international trade transactions as a means of payment. The bank's acceptance of the draft signifies its guarantee to pay the specified amount at a future date. This instrument provides assurance to the seller that they will receive payment, and it can be traded in the secondary market before its maturity. Therefore, the given correct answer is "Banker's Acceptance."

Explanation

A banker's acceptance is a time draft, which is a type of financial instrument that is drawn on and accepted by a bank. It is commonly used in international trade transactions as a means of payment. The bank's acceptance of the draft signifies its guarantee to pay the specified amount at a future date. This instrument provides assurance to the seller that they will receive payment, and it can be traded in the secondary market before its maturity. Therefore, the given correct answer is "Banker's Acceptance."

3. It is a debt instrument issued by the National Government with a maturity of less than one year.

Treasury Note

Treasury Bill

Treasury Receivables

Treasury Bond

A Treasury Bill is a short-term debt instrument issued by the National Government with a maturity of less than one year. It is used to finance the government's short-term borrowing needs and is considered a safe investment since it is backed by the full faith and credit of the government. Treasury Bills are typically sold at a discount to their face value and do not pay periodic interest like Treasury Notes or Bonds. Instead, investors earn a return by purchasing the bill at a discount and receiving the full face value at maturity.

Explanation

A Treasury Bill is a short-term debt instrument issued by the National Government with a maturity of less than one year. It is used to finance the government's short-term borrowing needs and is considered a safe investment since it is backed by the full faith and credit of the government. Treasury Bills are typically sold at a discount to their face value and do not pay periodic interest like Treasury Notes or Bonds. Instead, investors earn a return by purchasing the bill at a discount and receiving the full face value at maturity.

4. The first stock exchange in Asia was established in the _________________.

Malaysia

Japan

Philippines

Singapore

The correct answer is Philippines. The first stock exchange in Asia was established in the Philippines.

Explanation

The correct answer is Philippines. The first stock exchange in Asia was established in the Philippines.

5. Which among these is not the stock that is being traded during the first years of operation of the stock exchange in the Philippines?

Gold

Copper Mining

Oil

Silver

During the first years of operation of the stock exchange in the Philippines, silver was not one of the stocks being traded. This suggests that gold, copper mining, and oil were being traded, but silver was not included in the list of stocks available for trading.

Explanation

During the first years of operation of the stock exchange in the Philippines, silver was not one of the stocks being traded. This suggests that gold, copper mining, and oil were being traded, but silver was not included in the list of stocks available for trading.

6. Which among these money market instruments is considered the riskiest one?

Banker's Acceptance

Certificate of Deposit

Repurchase Agreement

Commercial Paper

Certificate of Deposit (CD) is considered the riskiest money market instrument among the options given. This is because a CD is a time deposit with a fixed maturity date and fixed interest rate, and it cannot be withdrawn before the maturity date without incurring a penalty. Unlike the other options, CDs are not backed by any form of collateral or guarantee. Therefore, if the issuer of the CD defaults or faces financial difficulties, there is a higher risk of losing the invested principal amount.

Explanation

Certificate of Deposit (CD) is considered the riskiest money market instrument among the options given. This is because a CD is a time deposit with a fixed maturity date and fixed interest rate, and it cannot be withdrawn before the maturity date without incurring a penalty. Unlike the other options, CDs are not backed by any form of collateral or guarantee. Therefore, if the issuer of the CD defaults or faces financial difficulties, there is a higher risk of losing the invested principal amount.

7. Listed are the functions of Capital Market, except:

Help to Central Bank

Benefits to Investor

Stability in Security Prices

Encouragement to savings

The functions of the capital market include benefits to investors, stability in security prices, and encouragement to savings. However, helping the central bank is not a function of the capital market. The capital market primarily focuses on facilitating the buying and selling of financial securities such as stocks, bonds, and derivatives, and providing a platform for companies and governments to raise capital. While the central bank plays a crucial role in regulating the overall financial system, its functions are separate from those of the capital market.

Explanation

The functions of the capital market include benefits to investors, stability in security prices, and encouragement to savings. However, helping the central bank is not a function of the capital market. The capital market primarily focuses on facilitating the buying and selling of financial securities such as stocks, bonds, and derivatives, and providing a platform for companies and governments to raise capital. While the central bank plays a crucial role in regulating the overall financial system, its functions are separate from those of the capital market.

8. By advertising security prices, the Stock Exchange enables the investors to keep track of their investments and channelize them into the most profitable lines. Which capital market function is this?

Promotes Economic Growth

Stability in Security Prices

Benefits to Investor

Encouragement to Investment

The given correct answer for this question is "Benefits to Investor". The Stock Exchange plays a crucial role in providing benefits to investors by advertising security prices. By doing so, investors are able to keep track of their investments and make informed decisions. This enables them to channelize their investments into the most profitable lines, maximizing their returns and minimizing risks. Therefore, the Stock Exchange's function of advertising security prices directly benefits the investors.

Explanation

The given correct answer for this question is "Benefits to Investor". The Stock Exchange plays a crucial role in providing benefits to investors by advertising security prices. By doing so, investors are able to keep track of their investments and make informed decisions. This enables them to channelize their investments into the most profitable lines, maximizing their returns and minimizing risks. Therefore, the Stock Exchange's function of advertising security prices directly benefits the investors.

9. It is the one who is being paid during a company's liquidation of its assets.

Preferred Stockholders

Common Stockholders

Bondholders

None of the Above

Bondholders are individuals or entities that have invested in a company's bonds. When a company goes through liquidation, its assets are sold off to repay its debts. Bondholders are given priority in the liquidation process, meaning they are the first to be paid back with the proceeds from the asset sales. This is because bonds are debt instruments, and bondholders are essentially lending money to the company. Therefore, bondholders are the ones who are being paid during a company's liquidation of its assets.

Explanation

Bondholders are individuals or entities that have invested in a company's bonds. When a company goes through liquidation, its assets are sold off to repay its debts. Bondholders are given priority in the liquidation process, meaning they are the first to be paid back with the proceeds from the asset sales. This is because bonds are debt instruments, and bondholders are essentially lending money to the company. Therefore, bondholders are the ones who are being paid during a company's liquidation of its assets.

10. A money market instrument with less than 1-30 days maturity.

Banker's Acceptance

Certificate of Deposit

Commercial Paper

Repurchase Agreement

A Banker's Acceptance is a money market instrument that is typically used in international trade transactions. It is a short-term promissory note issued by a bank, with a maturity period of less than 1-30 days. The bank guarantees payment to the holder of the instrument on the maturity date. This instrument is commonly used to finance the import/export activities and is considered a safe investment due to the involvement of a bank's guarantee.

Explanation

A Banker's Acceptance is a money market instrument that is typically used in international trade transactions. It is a short-term promissory note issued by a bank, with a maturity period of less than 1-30 days. The bank guarantees payment to the holder of the instrument on the maturity date. This instrument is commonly used to finance the import/export activities and is considered a safe investment due to the involvement of a bank's guarantee.