Financial Markets and Institutions MCQs

1. What is the primary function of financial markets?
(A) Tax collection
(B) Money printing
(C) Facilitating the flow of funds
(D) Controlling inflation

2. Which of the following is a primary market instrument?
(A) Treasury bond
(B) Initial public offering (IPO)
(C) Mutual fund
(D) Secondary equity

3. What is a secondary market?
(A) Market for new securities
(B) Market for second-hand goods
(C) Market for existing securities
(D) Market for non-financial assets

4. A treasury bill is classified as a:
(A) Long-term debt instrument
(B) Derivative
(C) Money market instrument
(D) Capital market instrument

5. Who regulates the stock market in the United States?
(A) Federal Reserve
(B) World Bank
(C) Securities and Exchange Commission (SEC)
(D) IMF

6. The interbank market primarily deals in:
(A) Commodities
(B) Stocks
(C) Foreign exchange
(D) Retail loans

7. Which of the following is a depository institution?
(A) Investment bank
(B) Commercial bank
(C) Mutual fund
(D) Insurance company

8. What is the main function of a central bank?
(A) Issuing loans to public
(B) Regulating stock markets
(C) Controlling monetary policy
(D) Providing insurance

9. Bonds are generally considered:
(A) Equity instruments
(B) Ownership claims
(C) Debt instruments
(D) Derivatives

10. Which market involves the trading of currencies?
(A) Stock market
(B) Forex market
(C) Bond market
(D) Commodities market