Prepare for JKSSB FAA 2026 with these Important MCQs on the Indian Financial Management System, specially prepared by Exam Waves. Practice key questions on financial institutions, banking, financial markets, money market, capital market, financial instruments, and stock exchanges for better exam preparation.
Q1. Consider the following statements regarding the structure of the Indian Financial Management System (IFMS):
- Financial Institutions form an important component of the financial system.
- Financial Markets include organised and unorganised markets.
- Financial Instruments may include money market and capital market instruments.
- Financial Services include activities such as banking, merchant banking, insurance and leasing.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q2. Consider the following statements regarding Financial Institutions:
- They collect resources by accepting deposits from individuals and institutions.
- They lend these funds to those who need them.
- They buy and sell financial instruments.
- They accept deposits, grant loans and invest in securities.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q3. Consider the following statements regarding the Organised Financial System:
- It is regulated by authorities such as RBI and SEBI.
- The unorganised or informal sector exists outside the organised financial system.
- Individual lenders may form part of the financial system.
- Non-banking financial institutions, chit fund companies and pawn brokers are also included.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q4. Consider the following formal components of the Financial System:
- Financial Institutions include banks and non-bank institutions.
- Financial Markets include Money Market and Capital Market.
- Financial Instruments include term loans and other instruments.
- Financial Services include fund-based and fee-based services.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q5. Consider the following statements regarding Banking Institutions:
- They extend credit while lending money.
- The supply of money is created as credit.
- They collect money from the public as deposits.
- Interest is paid on deposits.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q6. Which of the following statements correctly describe Commercial Banks and their deposits?
- Accepting deposits and lending loans are main functions of Commercial Banks.
- Current deposits are one type of bank deposit.
- Savings deposits and recurring deposits are types of deposits.
- Fixed deposits are also included among bank deposits.
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q7. Consider the following statements regarding different types of loans:
- Overdraft is a type of loan facility.
- Cash Credit is included among the types of loans.
- Term Loans are included among the types of loans.
- Discounting of Bills is also included among loan facilities.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q8. Consider the following pairs of Financial Institutions and the years mentioned for their establishment:
- IFCI — 1948
- IDBI — July 1964
- ICICI — 1955
- LIC — 1956
Which of the pairs given above are correctly matched?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q9. Consider the following statements regarding Financial Institutions and Non-Banking Institutions:
- GIC is associated with the year 1972 in the given classification.
- Non-Banking Institutions also lend financial resources.
- They lend funds but do not create credit like banks.
- LIC and UTI are given as examples of Non-Banking Institutions.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q10. Consider the following statements regarding Financial Markets:
- Financial Markets deal with financial securities and financial services.
- In these markets, money as well as monetary claims are traded.
- Purchase of bonds is given as an example of a Financial Market transaction.
- Financial Markets are concerned only with physical commodities.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: B
Q11. Consider the following statements regarding Money Market:
- It is a market where short-term funds are borrowed and lent.
- It deals with short-term monetary assets having maturity of one year or less.
- Treasury Bills are examples of Money Market instruments.
- Money Market primarily deals with securities having maturity exceeding one year.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: B
Q12. Consider the following statements regarding Treasury Bills:
- Treasury Bills are also known as T-Bills.
- They are promissory notes issued by the government.
- They are issued without a risk factor.
- Their maturity period is less than one year.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q13. Consider the following statements regarding Call Money, Notice Money and Term Money:
- Call Money refers to a loan for one day.
- Usually, no collateral securities are required for Call Money.
- Notice Money refers to money borrowed for more than one day but less than 14 days.
- Term Money refers to money borrowed for more than 14 days.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q14. Consider the following statements regarding Commercial Paper:
- It is an unsecured short-term promissory note.
- It is issued by large companies.
- It is issued by companies with high credit ratings.
- Its maturity period ranges from 7 days to 1 year.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q15. Consider the following statements regarding Certificate of Deposit (CD):
- It is an unsecured negotiable Money Market instrument.
- It is a short-term deposit issued by banks or financial institutions to raise funds.
- It forms part of the Money Market.
- It is primarily a long-term Capital Market instrument with maturity exceeding one year.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: B
Q16. Consider the following statements regarding Capital Market:
- It deals with long-term funds.
- It deals with securities having maturity of more than one year.
- Shares, debentures and bonds are examples of Capital Market securities.
- It is restricted exclusively to securities having maturity of less than one year.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: B
Q17. Consider the following statements regarding Primary and Secondary Markets:
- Primary Market deals with new securities.
- New securities are issued for the first time in the Primary Market.
- Primary Market raises fresh capital in the form of shares and debentures.
- Secondary Market deals with existing securities.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q18. Consider the following statements regarding IPO, FPO and Tender Method:
- IPO refers to the issue of securities to the public for the first time.
- IPO may involve a fresh issue of shares or an offer for sale of existing securities by an unlisted company.
- FPO refers to the sale of securities by a listed company.
- Under the Tender Method, the issue price is not predetermined.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q19. Consider the following Stock Exchanges and their corresponding years as given in the topic:
- BSE — 1875
- ASE — 1894
- CSE — 1908
- NSE — 1992
Which of the pairs given above are correctly matched?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q20. Consider the following statements regarding Bull, Bear and Wolf in the Stock Market:
- A Bull is a speculator who buys shares expecting to sell them at a higher price in the future.
- A Bear is a speculator who sells securities expecting to buy them later at a lower price.
- A Wolf is described as a broker who is just a speculator.
- Both Bull and Bear represent different expectations regarding future security prices.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
