Class 10 IFM Unit 3 Primary market Important MCQ
Class 10 IFM – Unit 3: Primary Market (Most Important MCQs with Answers)
1. What is the Primary Market also known as?
a) Old Issue Market
b) New Issue Market
c) Money Market
d) Stock Market
👉 Answer: b) New Issue Market
2. The main function of the Primary Market is to:
a) Trade existing securities
b) Issue new securities
c) Lend money
d) Collect deposits
👉 Answer: b) Issue new securities
3. IPO stands for:
a) Initial Public Offer
b) Indian Public Offer
c) Institutional Public Offering
d) Investment Participation Offer
👉 Answer: a) Initial Public Offer
4. In an IPO, shares are offered to:
a) Existing shareholders only
b) Public for the first time
c) Company directors only
d) Private institutions only
👉 Answer: b) Public for the first time
5. Rights Issue means:
a) Free shares to shareholders
b) Offering additional shares to existing shareholders at a discount
c) Selling shares to the government
d) Offering shares to the public at a premium
👉 Answer: b) Offering additional shares to existing shareholders at a discount
6. Bonus Issue means:
a) Offering shares at premium
b) Offering shares at discount
c) Giving free shares to existing shareholders
d) Giving dividend in cash
👉 Answer: c) Giving free shares to existing shareholders
7. Private Placement refers to:
a) Issue of shares to the general public
b) Issue of shares to selected investors only
c) Issue of shares through stock exchange
d) Issue of shares to government
👉 Answer: b) Issue of shares to selected investors only
8. Preferential Allotment means:
a) Allotment of shares to promoters and key investors
b) Issue to employees only
c) Public issue through exchange
d) Issue through depository
👉 Answer: a) Allotment of shares to promoters and key investors
9. Which regulatory body controls the primary market?
a) RBI
b) SEBI
c) IRDA
d) Ministry of Finance
👉 Answer: b) SEBI
10. Which document must a company issue before inviting the public to buy shares?
a) DRF
b) Prospectus
c) Contract Note
d) Memorandum of Deposit
👉 Answer: b) Prospectus
11. The first public sale of shares is called:
a) IPO
b) FPO
c) NFO
d) Rights Issue
👉 Answer: a) IPO
12. FPO stands for:
a) Fixed Price Offer
b) Follow-on Public Offer
c) Free Public Offer
d) Funded Private Offer
👉 Answer: b) Follow-on Public Offer
13. When a company offers securities to the public for the first time, it raises capital through:
a) Secondary Market
b) Primary Market
c) Money Market
d) Capital Reserve
👉 Answer: b) Primary Market
14. The term “Book Building” refers to:
a) Estimating the value of company books
b) Price discovery process during IPO
c) Printing company’s books
d) Registering with SEBI
👉 Answer: b) Price discovery process during IPO
15. Minimum subscription means:
a) Minimum dividend declared
b) Minimum amount to be collected to start business
c) Minimum capital company must receive from investors to issue shares
d) Minimum loan value approved by banks
👉 Answer: c) Minimum capital company must receive from investors to issue shares
16. The document that contains terms and conditions of issue is called:
a) Contract Note
b) Prospectus
c) Share Certificate
d) Demat Statement
👉 Answer: b) Prospectus
17. What happens if minimum subscription is not received?
a) Shares are allotted partially
b) Money is refunded to investors
c) Company increases price
d) Issue continues indefinitely
👉 Answer: b) Money is refunded to investors
18. Which of the following is not an instrument of Primary Market?
a) IPO
b) FPO
c) Rights Issue
d) Trading in listed shares
👉 Answer: d) Trading in listed shares
19. ADR stands for:
a) American Depository Receipt
b) Annual Dividend Report
c) Asset Deposit Ratio
d) American Dividend Register
👉 Answer: a) American Depository Receipt
20. GDR is used to raise funds from:
a) Indian Investors
b) Foreign Investors (Non-US)
c) Government
d) Banks
👉 Answer: b) Foreign Investors (Non-US)
21. Which market provides liquidity to securities?
a) Primary Market
b) Secondary Market
c) Money Market
d) Government Bond Market
👉 Answer: b) Secondary Market
22. What is the main difference between Rights and Bonus Issues?
a) Rights Issue is free, Bonus is paid
b) Rights are paid shares, Bonus are free shares
c) Both are free issues
d) Rights are for new investors
👉 Answer: b) Rights are paid shares, Bonus are free shares
23. Who are Qualified Institutional Buyers (QIBs)?
a) Retail investors
b) Institutional investors like banks, insurance companies
c) Foreign tourists
d) HUFs
👉 Answer: b) Institutional investors like banks, insurance companies
24. Which type of issue helps companies raise funds without going public?
a) Private Placement
b) Rights Issue
c) Bonus Issue
d) IPO
👉 Answer: a) Private Placement
25. What is the role of a Merchant Banker in an IPO?
a) Provides banking loans
b) Manages the entire issue process
c) Provides insurance cover
d) Maintains trading accounts
👉 Answer: b) Manages the entire issue process
✅ Summary:
These 25 MCQs cover all crucial concepts from Unit 3: Primary Market — including IPO, FPO, Prospectus, Rights & Bonus Issues, SEBI, ADR/GDR, and issue processes — perfect for CBSE Board exams or internal assessments.
One Comment