Class 10 IFM Unit 6 Depository Most Imp MCQ | Financial Markets

BySonu Mahato
Unit 6: Depository – MCQ Questions

📊 Unit 6: Depository

Introduction to Financial Markets – Class X

Multiple Choice Questions (MCQs)

Question 1
What is a Depository?
  • A A place where money is deposited
  • B An organization that holds securities in electronic form
  • C A bank that issues loans
  • D A stock exchange
Answer: B – An organization that holds securities in electronic form
Question 2
Which of the following is a similarity between a Bank and a Depository?
  • A Both deal with physical cash only
  • B Both hold assets in custody for customers
  • C Both issue credit cards
  • D Both are regulated by RBI only
Answer: B – Both hold assets in custody for customers
Question 3
What does DP stand for in the context of depositories?
  • A Direct Participant
  • B Depository Participant
  • C Deposit Provider
  • D Digital Payment
Answer: B – Depository Participant
Question 4
What does ISIN stand for?
  • A Indian Securities Identification Number
  • B International Securities Identification Number
  • C Indian Stock Information Number
  • D Investment Securities Index Number
Answer: B – International Securities Identification Number
Question 5
What is the role of a Custodian in the depository system?
  • A To trade securities
  • B To hold and safeguard securities on behalf of institutional investors
  • C To issue new securities
  • D To regulate the market
Answer: B – To hold and safeguard securities on behalf of institutional investors
Question 6
What is Dematerialization?
  • A Conversion of electronic shares to physical form
  • B Conversion of physical shares to electronic form
  • C Buying shares online
  • D Selling shares in the market
Answer: B – Conversion of physical shares to electronic form
Question 7
What is a DRF in the context of dematerialization?
  • A Dividend Request Form
  • B Dematerialization Request Form
  • C Deposit Registration Form
  • D Direct Return Form
Answer: B – Dematerialization Request Form
Question 8
Which of the following is NOT a benefit of holding electronic shares?
  • A No risk of loss or theft
  • B Faster settlement of trades
  • C Higher transaction costs
  • D Easier transfer of ownership
Answer: C – Higher transaction costs (This is NOT a benefit; electronic shares actually reduce costs)
Question 9
Name the two main depositories in India.
  • A SEBI and RBI
  • B NSE and BSE
  • C NSDL and CDSL
  • D HDFC and ICICI
Answer: C – NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited)
Question 10
What is the primary benefit of participating in a depository?
  • A Guaranteed returns on investment
  • B Safe and convenient holding of securities
  • C Lower tax rates
  • D Free trading services
Answer: B – Safe and convenient holding of securities
Question 11
Who acts as an intermediary between the depository and the investor?
  • A Stock Exchange
  • B Depository Participant (DP)
  • C SEBI
  • D Registrar and Transfer Agent
Answer: B – Depository Participant (DP)
Question 12
What is eliminated when securities are held in electronic form?
  • A Trading risks
  • B Risks associated with physical certificates like theft, forgery, and damage
  • C Market volatility
  • D Tax liabilities
Answer: B – Risks associated with physical certificates like theft, forgery, and damage
Question 13
What document is required to open a demat account?
  • A Only PAN card
  • B Only bank account details
  • C PAN card, address proof, bank details, and photographs
  • D No documents required
Answer: C – PAN card, address proof, bank details, and photographs
Question 14
What happens during the dematerialization process?
  • A Physical shares are destroyed and converted to electronic form
  • B Electronic shares are printed as certificates
  • C Shares are sold in the market
  • D Dividends are distributed
Answer: A – Physical shares are destroyed and converted to electronic form
Question 15
Which form needs to be filled for dematerialization?
  • A IPO Application Form
  • B DRF (Dematerialization Request Form)
  • C KYC Form
  • D Trading Account Form
Answer: B – DRF (Dematerialization Request Form)
Question 16
What is the main advantage of dematerialization for investors?
  • A Higher returns
  • B Faster, safer, and more efficient holding and transfer of securities
  • C Lower market prices
  • D Tax exemption
Answer: B – Faster, safer, and more efficient holding and transfer of securities
Question 17
Can physical securities still be traded in India?
  • A Yes, all securities can be traded in physical form
  • B No, trading in physical securities is largely phased out
  • C Only government bonds can be traded physically
  • D Only mutual funds can be traded physically
Answer: B – No, trading in physical securities is largely phased out
Question 18
What is the role of ISIN in the depository system?
  • A To identify investors
  • B To uniquely identify securities
  • C To calculate taxes
  • D To set market prices
Answer: B – To uniquely identify securities
Question 19
Which of the following can act as a Depository Participant?
  • A Banks
  • B Brokers
  • C Financial institutions
  • D All of the above
Answer: D – All of the above (Banks, Brokers, and Financial institutions can act as DPs)
Question 20
What is the opposite process of dematerialization called?
  • A Materialization or Rematerialization
  • B Digitization
  • C Liquidation
  • D Settlement
Answer: A – Materialization or Rematerialization (conversion of electronic shares back to physical form)

Introduction to Financial Markets (Subject Code: 405) | CBSE Class X

Unit 6: Depository – Session 2025-2026

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