NISM Series X-A Ch.6: Securities Market Segments — 125 Practice Questions

Q: How do Alternative Investment Funds (AIFs) primarily raise money?

Through a private placement.. The text states: 'Alternative Investment Funds are privately pooled investments. They raise money through a private placement. An AIF cannot make an invitation to the public at large to raise money.'

Q: Private sector companies issue Commercial Papers primarily to raise funds for what duration?

Short-term debt capital, for less than one year.. The text specifies: 'corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q: An investor wishes to apply for an Initial Public Offer (IPO) of equity shares. According to SEBI regulations mentioned in the text, which payment mechanism is mandatory for submitting the application?

Application Supported by Blocked Amount (ASBA) facility.. The text states under '6.1.8 Applying to a Public Issue': 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.' It also mentions the use of UPI with ASBA facility as a new payment mechanism for retail investors

Q: Which of the following debt instruments are issued by private sector companies specifically to raise funds for less than one year (short-term debt capital)?

Commercial Papers. The text specifies, 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q: Which of the following instruments are exclusively issued by the central government for different maturities such as 91 days, 182 days, and 364 days?

Treasury Bills. The text states, 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q: Which of the following instruments are exclusively issued by the central government for different maturities such as 91 days, 182 days, and 364 days, and are referred to as risk-free gilt-edged instruments?

Treasury Bills. The text states: 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days. are called risk-free gilt-edged instruments.'

Q: What facility is mandatory for making applications in a public issue, which involves the investor's bank blocking the application money and releasing funds only upon allotment?

ASBA (Application Supported by Blocked Amount). The text explicitly states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.'

Q: Which of the following debt instruments are typically issued by private sector companies to raise funds for less than one year (short-term debt capital)?

Commercial papers. The text states, 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Multiple Choice Questions (125)

Q1 MCQ · 1 mark MediumAlternative Investment Funds (AIFs)

How do Alternative Investment Funds (AIFs) primarily raise money?

ABy making an invitation to the public at large.

BThrough a New Fund Offer (NFO) to retail investors.

✓Through a private placement.

DBy issuing tax-free bonds in the primary market.

Q2 MCQ · 1 mark HardApplying to Public Issue (Book Built)

In a book-built offer that is over-subscribed, how are shares allotted to successful applicants who bid at or above the determined cut-off price?

AAll successful applicants receive full allotment of the shares they applied for.

✓Shares are allotted on a proportionate basis, with refunds for the non-allotted portion.

CAllotment is decided by a lottery system among successful bidders.

DOnly investors who bid at the highest price receive allotment, while others are refunded.

💡 The text states: 'The issue may be over-subscribed, which means that the bids made at the cut-off price and higher were for a higher number of shares than what was offered. In an over-subscribed issue, the shares will be allotted to an investor on a proportionate basis. There will be a refund made to the extent that the shares allotted are lower than the shares applied for.'

Q3 MCQ · 1 mark EasyPrivate Sector Companies

Private sector companies issue Commercial Papers primarily to raise funds for what duration?

ALong-term debt capital, typically exceeding five years.

BEquity capital for growth and expansion.

✓Short-term debt capital, for less than one year.

DConvertible instruments that can be converted into equity.

💡 The text specifies: 'corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q4 MCQ · 1 mark MediumApplying to a Public Issue

An investor wishes to apply for an Initial Public Offer (IPO) of equity shares. According to SEBI regulations mentioned in the text, which payment mechanism is mandatory for submitting the application?

ADirect transfer of funds to the company's bank account.

BCash payment at designated bank branches.

✓Application Supported by Blocked Amount (ASBA) facility.

DPayment through a third-party wallet service not linked to ASBA.

💡 The text states under '6.1.8 Applying to a Public Issue': 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.' It also mentions the use of UPI with ASBA facility as a new payment mechanism for retail investors.

Q5 MCQ · 1 mark EasyPrivate Sector Companies - Debt Instruments

Which of the following debt instruments are issued by private sector companies specifically to raise funds for less than one year (short-term debt capital)?

ACorporate Bonds

✓Commercial Papers

CConvertible Instruments

DPreference Shares

💡 The text specifies, 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q6 MCQ · 1 mark HardPricing a Public Issue - Book Built Issue

A company plans to issue 5,000 shares through a book-built offer with a price band of Rs 120 to Rs 144. If bids are received, and the cut-off price is determined to be Rs 135, which of the following statements is TRUE regarding allotment?

AInvestors who bid at Rs 130 will receive allotment on a proportionate basis.

BOnly investors who bid at Rs 144 will receive full allotment.

✓All investors who bid at or above Rs 135 are eligible for allotment.

DRetail investors are guaranteed a discount of 10% on the cut-off price.

💡 The text explicitly states: 'The offer of 5,000 shares is filled up at the cut-off price of Rs.135. All investors who bid at this price and higher are eligible for allotment in their respective categories.' Option A is incorrect because bids below the cut-off price are not eligible. Option B is incorrect because all bids at or above the cut-off are eligible. Option D is incorrect because the text says retail investors *may* have a discount, not *guaranteed*, and it's 'not lower than by more than ten percent' which is a ceiling, not a fixed discount.

Q7 MCQ · 1 mark EasySources of Funds - Government Securities

Which of the following instruments are exclusively issued by the central government for different maturities such as 91 days, 182 days, and 364 days?

ACorporate Bonds

BCommercial Papers

✓Treasury Bills

DPreference Shares

💡 The text states, 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q8 MCQ · 1 mark EasyIssuers of Securities

Which of the following instruments are exclusively issued by the central government for different maturities such as 91 days, 182 days, and 364 days, and are referred to as risk-free gilt-edged instruments?

ACorporate Bonds

✓Treasury Bills

CCommercial Papers

DPreference Shares

💡 The text states: 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days. are called risk-free gilt-edged instruments.'

Q9 MCQ · 1 mark MediumApplying to a Public Issue

What facility is mandatory for making applications in a public issue, which involves the investor's bank blocking the application money and releasing funds only upon allotment?

ARTGS (Real Time Gross Settlement)

BNEFT (National Electronic Funds Transfer)

✓ASBA (Application Supported by Blocked Amount)

DIMPS (Immediate Payment Service)

💡 The text explicitly states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.'

Q10 MCQ · 1 mark MediumIssuers of Securities

Which of the following debt instruments are typically issued by private sector companies to raise funds for less than one year (short-term debt capital)?

ACorporate bonds

BPreference shares

✓Commercial papers

DConvertible instruments

💡 The text states, 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q11 MCQ · 1 mark MediumIssuers of Securities

An important factor to consider when investing in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) units, even in a public offer, is that:

AThey are always privately placed and not listed on stock exchanges.

✓There is a higher minimum amount for investment compared to a normal IPO.

CTheir units can only be traded in the primary market.

DThey offer guaranteed tax-free returns to investors.

💡 The text states, 'An important factor to consider in these investments, is that there is a higher minimum amount for investment even when the units are offered in a public offer as compared to a normal IPO.'

Q12 MCQ · 1 mark EasyApplying to Public Issue

What is the mandatory facility that investors must use when making applications in a public issue, as per the provided text?

AReal-Time Gross Settlement (RTGS)

BNational Electronic Funds Transfer (NEFT)

✓Application Supported by Blocked Amount (ASBA)

DUnified Payment Interface (UPI)

💡 The text states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.' While UPI is mentioned as a new payment mechanism, it is specifically described as being 'with facility of blocking Funds (ASBA facility)', indicating ASBA is the core mandatory requirement.

Q13 MCQ · 1 mark MediumPricing a Public Issue

Which method of pricing a public issue involves the company and its issue managers specifying a floor price or a price band, and investors bidding to identify the market's willing price for the securities?

AFixed Price Issue

BRights Issue

✓Book Built Issue

DPreferential Allotment

💡 The text describes: 'The objective of a book building process is to identify the price that the market is willing to pay for the securities being issued by the company. The company and its issue managers will specify either a floor price (base price) or a price band... within which investors can bid.'

Q14 MCQ · 1 mark EasyPublic Sector Units

When the government, as a majority shareholder in a Public Sector Unit (PSU), offers a portion of its shares to the public, this action is termed as:

AFresh Issue

BBonus Issue

✓Disinvestment

DRights Issue

💡 The text explains, 'Public sector units... may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

Q15 MCQ · 1 mark EasyTypes of Public Issue of Equity Shares

What is the term for the first public offer of shares made by a company?

AFurther Public Offer (FPO)

BOffer for Sale (OFS)

✓Initial Public Offer (IPO)

DRights Issue

💡 The text states under 'a. Initial Public Offer (IPO)': 'The first public offer of shares made by a company is called an Initial Public Offer (IPO).'

Q16 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

In the context of an Initial Public Offer (IPO), which of the following is a key characteristic of an 'Offer for Sale' (OFS) compared to a 'Fresh Issue of Shares'?

AIn an OFS, the issued share capital of the company increases, whereas in a Fresh Issue, it remains unchanged.

✓In an OFS, the proceeds from the IPO go to the existing shareholders selling the shares, whereas in a Fresh Issue, the proceeds go to the company.

CA Fresh Issue is typically made by promoters to dilute their holdings, while an OFS is made by the company to raise new capital.

DAn OFS results in a reduction of the percentage holding of existing shareholders, while a Fresh Issue does not affect existing shareholders' holdings.

💡 For an Offer for Sale, the text states: 'The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company.' For a Fresh Issue, 'New shares are issued by the company to public investors. The issued share capital of the company increases.'

Q17 MCQ · 1 mark EasyApplying to a Public Issue

What facility must investors use for applications made in a public issue to subscribe to securities?

AElectronic Fund Transfer (EFT)

BReal Time Gross Settlement (RTGS)

✓Application Supported by Blocked Amount (ASBA)

DNational Electronic Funds Transfer (NEFT)

💡 The text specifies: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.'

Q18 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

In an Initial Public Offer (IPO) that is structured purely as an 'Offer for Sale' by existing shareholders, which of the following statements is TRUE?

AThe issued share capital of the company increases.

BThe proceeds from the IPO go to the company for its operations.

CThe percentage holding of existing shareholders will increase.

✓The share capital of the company does not change.

💡 The text explains: 'Offer for Sale: Existing shareholders such as promoters or financial institutions offer a part of their holding to the public investors. The share capital of the company does not change since the company is not making a new issue of shares. The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company. The holding of the existing shareholders in the share capital of the company will reduce.'

Q19 MCQ · 1 mark EasyPublic Sector Units (PSUs)

When the government offers a portion of its shares held in a Public Sector Unit (PSU) to the public, this process is known as:

AFresh Issue of Shares

BFurther Public Offer

✓Disinvestment

DPrivate Placement

💡 The text explicitly states: 'These companies may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

Q20 MCQ · 1 mark HardIssuers of Securities

Which of the following statements is TRUE regarding Alternative Investment Funds (AIFs)?

AAIFs primarily raise money through public offers to a large number of investors.

BAIFs are open-ended funds that allow investors to exit at any time at the prevailing value of units.

✓AIFs are privately pooled investments and cannot make an invitation to the public at large to raise money.

DAIFs exclusively invest in real estate and infrastructure projects.

💡 The text states, 'Alternative Investment Funds are privately pooled investments. They raise money through a private placement. An AIF cannot make an invitation to the public at large to raise money.' Options A is incorrect because they cannot invite the public. Option B describes mutual funds, not AIFs. Option D describes REITs and InvITs.

Q21 MCQ · 1 mark EasySources of Funds

What is the term used when the government offers a portion of its shares held in Public Sector Units (PSUs) to the public?

AInitial Public Offer (IPO)

BFresh Equity Offer

✓Disinvestment

DFurther Public Offer (FPO)

Q22 MCQ · 1 mark MediumPrivate Sector Companies - Debt Instruments

Which of the following statements correctly distinguishes between corporate bonds and commercial papers based on the provided text?

ACorporate bonds are issued by Public Sector Units, while commercial papers are issued by Private Sector Companies.

✓Corporate bonds are used to raise long-term debt capital, whereas commercial papers are used to raise short-term debt capital (less than one year).

CCorporate bonds offer tax benefits to investors, while commercial papers do not.

DCorporate bonds are available only in the primary market, while commercial papers are available only in the secondary market.

💡 Under the 'Private Sector Companies' section, the text explicitly states: 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q23 MCQ · 1 mark EasyTreasury Bills Issuance

Which entity is solely responsible for issuing treasury bills with maturities such as 91 days, 182 days, and 364 days, according to the provided text?

APublic Sector Units

BPrivate Sector Companies

CBanks and Financial Institutions

✓Central Government

💡 The text explicitly states: 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q24 MCQ · 1 mark EasyGovernment Securities

Which of the following statements is true regarding Treasury Bills?

AThey are issued by state governments for various maturities.

✓They are considered risk-free gilt-edged instruments issued by the central government.

CThey are issued for long-term debt capital, typically exceeding one year.

DInterest earned on Treasury Bills is exempt from tax under specific sections of the Income Tax Act.

💡 The text states that 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days' and they 'are called risk-free gilt-edged instruments.'

Q25 MCQ · 1 mark MediumRegulatory Norms for Public Issue of Shares

Which of the following regulatory frameworks primarily governs primary market offerings of shares in India, as per the provided text?

AOnly the Companies Act, 2013/1956

BOnly SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018

✓SEBI (ICDR) Regulations, 2018, Companies Act, 2013/1956, and RBI regulations for non-resident investors.

DSecurities Contracts (Regulation) Act, 1956 and Foreign Exchange Management Act, 1999.

💡 The text states: 'Primary market offerings are subject to regulatory requirements laid down by Securities and Exchange Board of India (SEBI) in the SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 and the provisions of the Companies Act, 2013/1956... They are also subject to RBI regulations as regards issues to non-resident investors and receipt of money from abroad.'

Q26 MCQ · 1 mark HardTypes of Public Issue - Offer for Sale

In an Initial Public Offer (IPO) that is structured purely as an 'Offer for Sale' by existing shareholders, which of the following statements is TRUE?

AThe issued share capital of the company increases, and the proceeds go to the company.

✓The issued share capital of the company does not change, and the proceeds go to the selling shareholders.

CThe percentage holding of existing shareholders will increase due to the sale.

DThe company is making a new issue of shares to the public.

💡 The text states for 'Offer for Sale': 'The share capital of the company does not change since the company is not making a new issue of shares. The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company. The holding of the existing shareholders in the share capital of the company will reduce.'

Q27 MCQ · 1 mark EasySources of Funds - Government

Which of the following instruments are exclusively issued by the central government for different maturities such as 91 days, 182 days, and 364 days?

ACorporate Bonds

✓Treasury Bills

CCommercial Papers

DTax-free Bonds

💡 The text states, 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q28 MCQ · 1 mark MediumTypes of Public Issue (IPO)

In the context of an Initial Public Offer (IPO), what is the key difference between a 'Fresh Issue of Shares' and an 'Offer for Sale' regarding the company's issued share capital?

✓In a Fresh Issue, the company's share capital increases, while in an Offer for Sale, it does not change.

BIn an Offer for Sale, the company's share capital increases, while in a Fresh Issue, it remains unchanged.

CBoth Fresh Issue and Offer for Sale always result in an increase in the company's share capital.

DNeither Fresh Issue nor Offer for Sale causes any change in the company's share capital.

💡 The text explains: 'Fresh Issue of Shares: New shares are issued by the company to public investors. The issued share capital of the company increases.' And 'Offer for Sale: ...The share capital of the company does not change since the company is not making a new issue of shares.'

Q29 MCQ · 1 mark EasyTypes of Public Issue of Equity Shares

What is the term for the first public offer of shares made by a company?

AFurther Public Offer (FPO)

✓Initial Public Offer (IPO)

CRights Issue

DPreferential Allotment

💡 The text defines: 'The first public offer of shares made by a company is called an Initial Public Offer (IPO).'

Q30 MCQ · 1 mark HardPricing a Public Issue of Shares

In a book-built issue, if a company wants to issue 5,000 shares and bids are received as follows: Rs 144 (1000 shares), Rs 140 (1500 shares), Rs 135 (2500 shares), Rs 130 (1000 shares), and Rs 120 (500 shares). What would be the cut-off price at which the issue gets subscribed?

ARs 144

BRs 140

✓Rs 135

DRs 130

💡 To find the cut-off price, we sum the demand from the highest price downwards until the total number of shares offered (5,000) is met or exceeded. - At Rs 144: Demand = 1000 shares - At Rs 140 and above: Demand = 1000 (at Rs 144) + 1500 (at Rs 140) = 2500 shares - At Rs 135 and above: Demand = 2500 (at Rs 140 & above) + 2500 (at Rs 135) = 5000 shares. Since the total demand reaches 5,000 shares at Rs 135, this is the cut-off price. The text also provides this example directly: 'The offer of 5,000 shares is filled up at the cut-off price of Rs.135.'

Q31 MCQ · 1 mark EasyGovernment Securities

Treasury bills issued by the central government are specifically referred to as:

AHigh-risk corporate bonds

✓Risk-free gilt-edged instruments

CTax-free municipal bonds

DConvertible preference shares

💡 The text states, 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days. are called risk-free gilt-edged instruments.'

Q32 MCQ · 1 mark MediumRegulatory Norms

Which regulatory body's Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018, govern primary market offerings in India, as mentioned in the text?

AReserve Bank of India (RBI)

BMinistry of Finance

✓Securities and Exchange Board of India (SEBI)

DRegistrar of Companies (RoC)

Q33 MCQ · 1 mark EasyApplying to a Public Issue

Which facility is mandated by SEBI for making applications in a public issue, involving an authorization to the investor's bank to block the application money and release funds only on allotment?

ARTGS (Real Time Gross Settlement)

BNEFT (National Electronic Funds Transfer)

✓ASBA (Application Supported by Blocked Amount)

DECS (Electronic Clearing Service)

💡 The text clearly states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility. ASBA is an application for subscription to an issue containing an authorization to the investors’ bank to block the application money in the bank account and release funds only on allotment.'

Q34 MCQ · 1 mark MediumSources of Funds - PSUs

Which of the following statements about Public Sector Units (PSUs) and their fundraising is TRUE, according to the text?

APSUs primarily issue commercial papers for long-term debt capital.

BDisinvestment by the government in PSUs is an example of a Fresh Issue of Shares.

✓Some PSU bonds may provide tax benefits to investors, such as exemption from tax for interest earned.

DPSUs are companies where private entities hold the majority stake.

💡 The text states: 'These companies also issue bonds. Some of the bonds may provide tax benefits to investors in the form of exemption from tax for interest earned on them or to save on long-term capital gains.' Option B is incorrect as PSU disinvestment is an example of an Offer for Sale. Option D is incorrect as the government is the majority shareholder. Option A is incorrect as commercial papers are for short-term debt capital.

Q35 MCQ · 1 mark MediumSources of Funds

Which of the following entities is explicitly stated to raise money *only* through a private placement and *cannot* make an invitation to the public at large to raise money?

AMutual Funds

BReal Estate Investment Trusts (REITs)

CInfrastructure Investment Trusts (InvITs)

✓Alternative Investment Funds (AIFs)

💡 The text states: 'Alternative Investment Funds are privately pooled investments. They raise money through a private placement. An AIF cannot make an invitation to the public at large to raise money.' In contrast, REITs and InvITs 'may issue units in a public offer or private placement'.

Q36 MCQ · 1 mark EasyPublic Sector Units

What is the term used when the government offers a portion of its shares held in a Public Sector Unit (PSU) to the public?

AFresh Equity Offer

✓Disinvestment

CCapital Restructuring

DFurther Public Offer

Q37 MCQ · 1 mark EasyTypes of Public Issue of Equity Shares

Which of the following statements accurately describes an Offer for Sale (OFS) in a public issue of shares?

ANew shares are issued by the company to public investors, increasing the company's issued share capital.

BExisting shareholders, such as promoters or financial institutions, offer a part of their holding to the public investors, with the proceeds going to the company.

✓Existing shareholders offer a part of their holding to the public investors, and the share capital of the company does not change.

DIt is the first public offer of shares made by a company, resulting in a change in the shareholding pattern from privately held to widely held.

💡 The text states, 'Offer for Sale: Existing shareholders such as promoters or financial institutions offer a part of their holding to the public investors. The share capital of the company does not change since the company is not making a new issue of shares. The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company.'

Q38 MCQ · 1 mark MediumREITs and InvITs

What distinguishes the minimum investment requirement for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) public offers compared to a normal Initial Public Offer (IPO)?

AREITs and InvITs have no minimum investment amount, making them accessible to all retail investors.

BThe minimum investment for REITs and InvITs is typically lower than a normal IPO to encourage broad participation.

✓REITs and InvITs require a higher minimum amount for investment even when units are offered in a public offer compared to a normal IPO.

DThe minimum investment for REITs and InvITs is determined by the secondary market trading prices, not by the public offer.

💡 The text explicitly states: 'An important factor to consider in these investments, is that there is a higher minimum amount for investment even when the units are offered in a public offer as compared to a normal IPO.'

Q39 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

In the context of a Public Sector Unit (PSU) making a public issue, when the government offers a portion of its shares to the public, and the proceeds go to the government rather than the company, what type of issue is this an example of?

AFresh Issue of Shares

BFurther Public Offer

✓Offer for Sale

DRights Issue

💡 The text states, 'The disinvestment of shares by the government in PSUs is an example of an offer for sale. The government offers a portion of its shares to the public in an IPO. The proceeds collected go to the government which is selling the shares and not to the company.'

Q40 MCQ · 1 mark EasyIssuers of Securities

Which of the following instruments are issued by the Central Government alone for different maturities such as 91 days, 182 days, and 364 days?

ACorporate Bonds

BCommercial Papers

✓Treasury Bills

DPreference Shares

💡 The text states: 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q41 MCQ · 1 mark HardIPO Components and Impact

A company makes an Initial Public Offer (IPO) which comprises a 10% fresh equity offer by the company and a 5% stake sale by its promoter. Which of the following statements accurately describes the impact on the company's share capital and the destination of the proceeds from this IPO?

AThe company's issued share capital will increase, and all proceeds from both the fresh equity offer and the stake sale will go to the company.

BThe company's issued share capital will remain unchanged, and all proceeds will go to the promoter.

✓The company's issued share capital will increase due to the fresh equity offer, and the proceeds from the fresh equity will go to the company, while proceeds from the stake sale will go to the promoter.

DThe company's issued share capital will decrease due to the stake sale, and the proceeds from both parts will be split between the company and the promoter.

💡 For a 'Fresh Issue of Shares', the text states: 'New shares are issued by the company to public investors. The issued share capital of the company increases.' For an 'Offer for Sale', it states: 'The share capital of the company does not change... The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company.' Therefore, the fresh equity offer increases share capital and its proceeds go to the company, while the stake sale (offer for sale) does not change share capital and its proceeds go to the promoter.

Q42 MCQ · 1 mark EasyGovernment Securities

What term is used to describe the risk-free gilt-edged instruments issued by the central government for different maturities?

ACorporate Bonds

BCommercial Papers

✓Treasury Bills

DSecuritized Papers

💡 The text states, 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.' These are also referred to as 'risk-free gilt-edged instruments.'

Q43 MCQ · 1 mark EasyApplying to a Public Issue

Which facility is mandated for making applications in a public issue, authorizing the investor's bank to block the application money in the bank account and release funds only upon allotment?

AElectronic Funds Transfer (EFT)

BReal-Time Gross Settlement (RTGS)

✓Application Supported by Blocked Amount (ASBA)

DNational Electronic Funds Transfer (NEFT)

💡 The text clearly states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.'

Q44 MCQ · 1 mark MediumRegulatory Norms for Public Issue of Shares

Which document must a company making a public issue of shares file with SEBI, containing information about the issuer, its operations, finances, promoters, and proposed use of funds?

AAnnual Report

✓Prospectus

CMemorandum of Association

DArticles of Association

💡 The text clarifies: 'The company making a public issue of shares has to file with SEBI a document giving all information of the issuer and the proposed issue... This document is called a prospectus.'

Q45 MCQ · 1 mark EasyRegulatory Norms

What is the primary document that a company making a public issue of shares has to file with SEBI, containing information about the issuer and the proposed issue?

AMemorandum of Association

BArticles of Association

✓Prospectus

DAnnual Report

💡 The text states, 'The company making a public issue of shares has to file with SEBI a document giving all information of the issuer and the proposed issue... This document is called a prospectus.'

Q46 MCQ · 1 mark HardBook Built Issue Pricing

A company aims to issue 5,000 shares through a book-built offer with a price band of Rs 120 to Rs 144. The bids received are as follows: - Rs 144: 1,000 shares - Rs 140: 1,500 shares - Rs 135: 2,500 shares - Rs 130: 1,000 shares - Rs 120: 500 shares Based on this information, what will be the cut-off price for the issue, and which investors will be eligible for allotment?

AThe cut-off price will be Rs 144, and only investors who bid at Rs 144 will be eligible.

BThe cut-off price will be Rs 140, and investors who bid at Rs 140 or higher will be eligible.

✓The cut-off price will be Rs 135, and investors who bid at Rs 135 or higher will be eligible.

DThe cut-off price will be Rs 130, and investors who bid at Rs 130 or higher will be eligible.

💡 To determine the cut-off price, we calculate the cumulative demand starting from the highest price: - At Rs 144: 1,000 shares - At Rs 140 (Rs 144 + Rs 140 bids): 1,000 + 1,500 = 2,500 shares - At Rs 135 (Rs 144 + Rs 140 + Rs 135 bids): 1,000 + 1,500 + 2,500 = 5,000 shares The total demand of 5,000 shares is met at the price of Rs 135. Therefore, Rs 135 is the cut-off price. The text states: 'All allottees who bid at or above the cut-off price are successful bidders and are eligible for allotment in the respective categories.'

Q47 MCQ · 1 mark EasyPublic Sector Units (PSUs)

Which of the following terms describes the process when the government offers a portion of shares held in a Public Sector Unit (PSU) to the public?

AInitial Public Offer (IPO)

BFurther Public Offer (FPO)

✓Disinvestment

DOffer for Sale (OFS)

💡 The text states: 'Public sector units are companies registered under the Companies Act, in which the government is the majority shareholder. These companies may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.' While an Offer for Sale (OFS) is a mechanism used for disinvestment, 'disinvestment' is the term specifically used to describe the government's action of offering its shares to the public.

Q48 MCQ · 1 mark MediumTypes of Investors

Which of the following is NOT listed as a category of investor that participates in primary market issues, according to the provided text?

AHindu Undivided Family (HUF)

BForeign Portfolio Investors (FPIs)

CLimited Liability Partnerships (LLP)

✓Venture Capital Funds (VCFs)

💡 The text lists the following categories: 'Resident individuals, Hindu Undivided Family (HUF), Minors through guardians, Registered societies and clubs, Non-resident Indians (NRI), Persons of Indian Origin (PIO), Banks, Financial institutions, Association of persons, Companies, Partnership firms, Trusts, Foreign portfolio investors (FPIs), Limited Liability Partnerships (LLP)'. Venture Capital Funds (VCFs) are not explicitly mentioned in this list.

Q49 MCQ · 1 mark MediumRegulatory Norms for Public Issues

Which regulatory bodies primarily lay down the requirements for primary market offerings and public issues of equity shares in India?

AReserve Bank of India (RBI) only

✓Securities and Exchange Board of India (SEBI) and the Companies Act

CInsurance Regulatory and Development Authority of India (IRDAI) and SEBI

DMinistry of Finance only

💡 The text explicitly states: 'Primary market offerings are subject to regulatory requirements laid down by Securities and Exchange Board of India (SEBI) in the SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 and the provisions of the Companies Act, 2013/1956...' It also mentions RBI regulations for non-resident investors, but SEBI and the Companies Act are the primary regulators for the issue itself.

Q50 MCQ · 1 mark MediumPublic Sector Units (PSUs)

In the context of Public Sector Units (PSUs), what does 'disinvestment' refer to?

AWhen a PSU makes a fresh equity offer to the public to raise new capital.

✓When the government offers a portion of the shares it holds in a PSU to the public.

CWhen a PSU issues bonds to raise long-term debt capital.

DWhen the government increases its majority shareholding in a PSU.

💡 The text states: 'Public sector units... may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

Q51 MCQ · 1 mark MediumPrivate Sector Companies - Debt Instruments

Which of the following debt instruments is issued by private sector companies to raise short-term debt capital for a period of less than one year?

ACorporate bonds

BPreference shares

✓Commercial papers

DDebentures

💡 The text clarifies, 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q52 MCQ · 1 mark MediumIssuers of Securities

Which of the following statements is TRUE regarding tax-free bonds, according to the provided text?

AFresh primary issuances have been common for approximately 8 years.

BInterest earned on these bonds is subject to tax for investors.

CThey are primarily available only in the primary market.

✓They are available in the secondary market.

Q53 MCQ · 1 mark HardAlternative Investment Funds

Which statement accurately describes Alternative Investment Funds (AIFs) according to the provided text?

AAIFs primarily raise funds by making an invitation to the public at large.

✓AIFs are characterized by being privately pooled investments and raise money through a private placement.

CAIFs are similar to Mutual Funds in their fund-raising approach, offering units in the domestic markets via NFOs.

DAIFs are typically listed on a stock exchange where their units can be traded at market-determined prices.

Q54 MCQ · 1 mark EasyIssuers of Securities

Which entity is solely responsible for issuing treasury bills for different maturities such as 91 days, 182 days, and 364 days?

AState Governments

BPublic Sector Units

✓Central Government

DPrivate Sector Companies

💡 The text mentions, 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q55 MCQ · 1 mark EasyTypes of Public Issue

Which of the following statements is true regarding an Offer for Sale (OFS) in a public issue?

AThe company issues new shares, leading to an increase in its share capital.

BThe proceeds from the issue go to the company for its operations.

✓Existing shareholders sell a portion of their holdings to the public.

DThe percentage holding of existing shareholders will increase.

💡 As per the text, in an Offer for Sale, 'Existing shareholders such as promoters or financial institutions offer a part of their holding to the public investors. The share capital of the company does not change since the company is not making a new issue of shares. The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company. The holding of the existing shareholders in the share capital of the company will reduce.'

Q56 MCQ · 1 mark MediumAllotment in Over-subscribed Issues

In a book-built issue, if the issue is over-subscribed (meaning bids at or above the cut-off price exceed the shares offered), how are the shares allotted to successful bidders?

AOn a first-come, first-served basis.

BOn a lottery basis among all successful bidders.

✓On a proportionate basis.

DOnly to institutional investors, excluding retail investors.

💡 The text states, 'In an over-subscribed issue, the shares will be allotted to an investor on a proportionate basis.'

Q57 MCQ · 1 mark HardBook Built Issue Pricing

A company issues shares through a book-built offer with a cut-off price of Rs 135. As per the regulations mentioned in the text, what is the lowest price at which shares can be allotted to retail investors?

ARs 120.00

✓Rs 121.50

CRs 128.25

DRs 135.00

💡 The text states: 'Book built issues may also have a clause which allows allotment to retail investors at a price that is at a discount to the cut off price which cannot however be at a price not lower than by more than ten percent of the price at which shares are allotted to the other category of investors.' If the cut-off price for other categories is Rs 135, then the lowest price for retail investors would be Rs 135 * (1 - 0.10) = Rs 135 * 0.90 = Rs 121.50.

Q58 MCQ · 1 mark MediumPricing a Public Issue - Book Built Issue

A company offers 5,000 shares through a book-built issue with a price band of Rs 120 to Rs 144. Bids received are: 1,000 shares at Rs 144, 1,500 shares at Rs 140, 2,500 shares at Rs 135, 1,000 shares at Rs 130, and 500 shares at Rs 120. What is the cut-off price at which the issue will be filled?

ARs 144

BRs 140

✓Rs 135

DRs 130

💡 To determine the cut-off price, we sum the demand from the highest price downwards until the total offered shares (5,000) are subscribed: - At Rs 144: 1,000 shares (Cumulative demand: 1,000) - At Rs 140: 1,500 shares (Cumulative demand: 1,000 + 1,500 = 2,500) - At Rs 135: 2,500 shares (Cumulative demand: 2,500 + 2,500 = 5,000) At Rs 135, the total demand reaches 5,000 shares, which is the offer size. Thus, Rs 135 is the cut-off price. The provided example confirms this.

Q59 MCQ · 1 mark MediumAlternative Investment Funds

Which statement accurately describes a characteristic of Alternative Investment Funds (AIFs)?

AAIFs primarily raise money through public offers to a wide range of retail investors.

BAIFs are publicly traded entities that invest directly in real estate or infrastructure projects.

✓AIFs are privately pooled investments that raise money through a private placement and cannot invite the public at large.

DAIFs are deposit-taking institutions that have access to low-cost funds from the public.

Q60 MCQ · 1 mark EasyIssuers of Securities - Alternative Investment Funds

What is a defining characteristic of Alternative Investment Funds (AIFs) regarding their fundraising methods?

AThey primarily raise funds through a New Fund Offer (NFO) to the public at large.

BThey are privately pooled investments that raise money exclusively through public offers.

✓They are privately pooled investments and cannot make an invitation to the public at large to raise money.

DThey are dependent on low-cost funds from the public, similar to deposit-taking institutions.

Q61 MCQ · 1 mark MediumIssuers of Securities

What is the primary method for Alternative Investment Funds (AIFs) to raise money, as they cannot make an invitation to the public at large?

APublic offer of units

BIssuance of commercial papers

✓Private placement

DIssuance of tax-free bonds

Q62 MCQ · 1 mark MediumSources of Funds - Various Entities

Which of the following statements correctly distinguishes between how Mutual Funds, REITs/InvITs, and Alternative Investment Funds (AIFs) raise funds?

AMutual Funds issue units through private placement, while REITs/InvITs and AIFs make public offers.

BREITs/InvITs have a lower minimum investment amount compared to normal IPOs, while Mutual Funds and AIFs do not specify such limits.

✓Mutual Funds make a New Fund Offer (NFO) of units, REITs/InvITs issue units in public offers or private placements, and AIFs raise money through private placement.

DAIFs can make an invitation to the public at large to raise money, unlike Mutual Funds and REITs/InvITs.

💡 The text states: 'Mutual Funds make a new fund offer (NFO) of units... REITs) and Infrastructure Investment Trusts (InvITs) may issue units in a public offer or private placement... Alternative Investment Funds are privately pooled investments. They raise money through a private placement. An AIF cannot make an invitation to the public at large to raise money.'

Q63 MCQ · 1 mark HardPricing a Public Issue - Book Building

A company wants to issue 5,000 shares through a book-built offer. The bids received are as follows: - Rs 144: 1,000 shares - Rs 140: 1,500 shares - Rs 135: 2,500 shares - Rs 130: 1,000 shares - Rs 120: 500 shares Based on this data, what would be the cut-off price for the issue?

ARs 144

BRs 140

✓Rs 135

DRs 130

💡 To find the cut-off price, we sum the bids from the highest price downwards until the total demand meets or exceeds the number of shares offered (5,000 shares). - At Rs 144: Total Demand = 1,000 shares - At Rs 140 and above: Total Demand = 1,000 (at Rs 144) + 1,500 (at Rs 140) = 2,500 shares - At Rs 135 and above: Total Demand = 2,500 (at Rs 140+) + 2,500 (at Rs 135) = 5,000 shares. Since the total demand reaches 5,000 shares exactly at Rs 135, this is the cut-off price. All investors who bid at Rs 135 or higher are eligible for allotment.

Q64 MCQ · 1 mark HardPricing a Public Issue of Shares

A company aims to issue 5,000 shares through a book-built offer with a price band of Rs 120 to Rs 144. Bids received are: 1,000 shares at Rs 144, 1,500 shares at Rs 140, 2,500 shares at Rs 135, 1,000 shares at Rs 130, and 500 shares at Rs 120. What will be the cut-off price for this issue?

ARs 144

BRs 140

✓Rs 135

DRs 130

💡 To determine the cut-off price, we identify the price at which the total demand for shares meets or exceeds the offer. The company wants to issue 5,000 shares. - Demand at Rs 144: 1,000 shares - Cumulative demand at Rs 140 (and above): 1,000 (at 144) + 1,500 (at 140) = 2,500 shares - Cumulative demand at Rs 135 (and above): 1,000 (at 144) + 1,500 (at 140) + 2,500 (at 135) = 5,000 shares Since the offer of 5,000 shares is fully subscribed at Rs 135, the cut-off price is Rs 135.

Q65 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

Which of the following statements is TRUE regarding an Offer for Sale (OFS) in a public issue of equity shares?

AThe issued share capital of the company increases.

BThe proceeds from the OFS go to the company for its growth initiatives.

CIt always involves the issuance of new shares by the company.

✓The share capital of the company does not change.

💡 The text clarifies: 'Offer for Sale: Existing shareholders such as promoters or financial institutions offer a part of their holding to the public investors. The share capital of the company does not change since the company is not making a new issue of shares. The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company.'

Q66 MCQ · 1 mark MediumPrivate Sector Companies

For private sector companies, which instrument is typically issued to raise short-term debt capital for less than one year?

ACorporate bonds

BPreference shares

COrdinary equity shares

✓Commercial papers

💡 The text states: 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q67 MCQ · 1 mark HardApplying to a Public Issue

In an over-subscribed book-built issue, what happens to investors who bid at the cut-off price or higher?

AThey receive a full refund of their application amount.

✓They receive allotment on a proportionate basis.

CThey are allotted all the shares they applied for.

DTheir bids are rejected, and they must reapply.

💡 The text explains: 'In an over-subscribed issue, the shares will be allotted to an investor on a proportionate basis.'

Q68 MCQ · 1 mark MediumIssuers of Securities

When the government offers a portion of shares held by a Public Sector Unit (PSU) to the public, this process is known as:

AInitial Public Offer (IPO)

BFresh Equity Offer

✓Disinvestment

DCapital Restructuring

💡 The text states, 'These companies may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

Q69 MCQ · 1 mark HardPublic Sector Units (PSUs) - Tax-Free Bonds

Based on the information provided, which statement regarding tax-free bonds is accurate?

AFresh primary issuances of tax-free bonds, where the coupon is free of tax, have been common in recent years.

BTax-free bonds are primarily issued under section 54EC of the Income Tax Act to save on long-term capital gains.

✓The interest earned by investors on tax-free bonds is exempt from tax, and they are currently available in the secondary market.

DNational Highway Authority of India (NHAI) continues to make fresh primary issuances of tax-free bonds annually.

💡 The text states: 'For tax free bonds, where the coupon (interest) is free of tax, there has not been any fresh primary issuance over approx. 8 years. Tax-free bonds are available in the secondary market.' Option A is incorrect due to 'not been any fresh primary issuance'. Option B incorrectly links tax-free bonds (coupon exempt) with Section 54EC (capital gains saving). Option D is incorrect as per the statement about no fresh primary issuance.

Q70 MCQ · 1 mark HardPricing Public Issues

A company wants to issue 5,000 shares through a book-built offer. Bids are received at various prices. Based on the example provided in the text, if the cumulative demand reaches 5,000 shares at Rs 135, what will be the cut-off price for this issue?

ARs 144

BRs 140

✓Rs 135

DRs 130

💡 The text provides an example: 'The offer of 5,000 shares is filled up at the cut-off price of Rs.135.' This occurs when the cumulative demand at or above a certain price equals the number of shares offered. In the example, cumulative bids are: Rs 144 (1000 shares), Rs 140 (1000+1500=2500 shares), Rs 135 (2500+2500=5000 shares). At Rs 135, the total 5,000 shares offered are subscribed, making it the cut-off price.

Q71 MCQ · 1 mark MediumPrivate Sector Companies / Debt Instruments

For private sector companies, which of the following instruments is specifically mentioned as being issued to raise funds for less than one year (short-term debt capital)?

AOrdinary Equity Shares

BCorporate Bonds

✓Commercial Papers

DPreference Shares

💡 The text states: 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q72 MCQ · 1 mark HardBook Built Issue Pricing

A company plans to issue 5,000 shares through a book-built offer with a price band of Rs 120 to Rs 144. The bids received are as follows: Price No. of Shares Rs 144 1,000 Rs 140 1,500 Rs 135 2,500 Rs 130 1,000 Rs 120 500 Based on this information, what will be the cut-off price for this issue?

ARs 144

BRs 140

✓Rs 135

DRs 130

💡 To determine the cut-off price, we calculate the cumulative demand starting from the highest price: - At Rs 144: Demand = 1,000 shares - At Rs 140 and above: Demand = 1,000 (at Rs 144) + 1,500 (at Rs 140) = 2,500 shares - At Rs 135 and above: Demand = 2,500 (at Rs 140 and above) + 2,500 (at Rs 135) = 5,000 shares Since the company wants to issue 5,000 shares, the cumulative demand reaches 5,000 shares at the price of Rs 135. Therefore, the cut-off price is Rs 135, as explicitly stated in the example: 'The offer of 5,000 shares is filled up at the cut-off price of Rs.135.'

Q73 MCQ · 1 mark HardBook Built Issue / Application Process

According to the provided text, what is the implication for an investor who chooses to bid at the 'cut-off price' in a book-built offer?

AThe investor is guaranteed to receive shares at a price lower than the final cut-off price.

✓The investor's application is always accepted, and they receive allotment at the price determined by the bidding process.

CThe investor's bid will be rejected if the issue is over-subscribed.

DThe investor must specify a bidding price within the price band, and bidding at cut-off is not an option.

💡 The text explicitly states: 'Bidding at the cut-off ensures that the investor’s application is always accepted.' and 'All investors who bid at the cut-off price or higher are successful bidders and receive allotment at the cut-off price.'

Q74 MCQ · 1 mark MediumPricing Public Issues

What is the primary objective of the book building process in a public issue of shares?

ATo allow the company to fix the share price without market input.

BTo determine the exact number of shares an investor will receive.

✓To identify the price that the market is willing to pay for the securities.

DTo ensure all bids are made at the cut-off price.

💡 The text states, 'The objective of a book building process is to identify the price that the market is willing to pay for the securities being issued by the company.'

Q75 MCQ · 1 mark EasyApplying to Public Issue

According to SEBI regulations, what is the mandatory facility that must be used for applications made in a public issue?

AUnified Payment Interface (UPI) directly for all investors.

✓Application Supported by Blocked Amount (ASBA).

CDemand Draft (DD) for the application money.

DDirect bank transfer to the issuer's account.

💡 The text explicitly states, 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.'

Q76 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

In the context of a public issue of equity shares, which of the following statements accurately describes an 'Offer for Sale'?

ANew shares are issued by the company, leading to an increase in its issued share capital.

BThe proceeds from the issue go directly to the company for its growth and operations.

✓Existing shareholders, such as promoters, sell a part of their holding, and the company's share capital remains unchanged.

DIt is always the first public offer of shares made by a company.

Q77 MCQ · 1 mark EasyPublic Sector Units (PSUs)

What is the term used when the government, as a majority shareholder in a Public Sector Unit (PSU), offers a portion of its shares held by them to the public?

AInitial Public Offer (IPO)

✓Disinvestment

CFurther Public Offer (FPO)

DFresh Equity Offer

💡 According to the text, 'These companies may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

Q78 MCQ · 1 mark MediumPublic Sector Units (PSUs)

What is 'disinvestment' in the context of Public Sector Units (PSUs), as described in the chapter?

AWhen PSUs issue new shares to raise fresh equity capital from the public.

✓When the government offers a portion of the shares it holds in a PSU to the public.

CWhen PSUs buy back shares from the public to reduce government ownership.

DWhen PSUs issue bonds that provide tax benefits to investors.

💡 The text states, 'Public sector units... may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

Q79 MCQ · 1 mark HardApplying to a Public Issue - Book Built Offer

In a book-built offer, what is the implication for an investor who chooses to bid at the 'cut-off price'?

AThe investor's application is guaranteed to be accepted at the lowest possible price in the band.

✓The investor's application is always accepted, and they receive allotment at the price determined by the bidding process.

CThe investor's application is only accepted if the issue is undersubscribed.

DThe investor must bid at the highest price in the band to ensure allotment.

💡 The text states, 'Bidding at the cut-off implies that the price they would accept is the price determined by the bidding process.' It also mentions, 'Bidding at the cut-off ensures that the investor’s application is always accepted.'

Q80 MCQ · 1 mark EasyGovernment Securities

Which entity is solely responsible for issuing treasury bills in India?

AState Governments

BPublic Sector Units (PSUs)

✓Central Government

DPrivate Sector Companies

💡 The text states: 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q81 MCQ · 1 mark EasyRegulatory Bodies

Public issues of equity shares in India are primarily governed by the regulatory requirements laid down by:

AReserve Bank of India (RBI) only

BMinistry of Finance only

✓Securities and Exchange Board of India (SEBI) and the Companies Act

DInsurance Regulatory and Development Authority of India (IRDAI)

💡 The text specifies, 'Primary market offerings are subject to regulatory requirements laid down by Securities and Exchange Board of India (SEBI) in the SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 and the provisions of the Companies Act, 2013/1956'.

Q82 MCQ · 1 mark HardREITs and InvITs

What is a distinct characteristic of the minimum investment amount for units offered in a public offer by Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) compared to a normal IPO?

AIt is generally lower to encourage wider participation.

BIt is identical to that of a normal IPO.

CIt is not specified and varies by scheme.

✓It is higher even when the units are offered in a public offer.

💡 The text states: 'An important factor to consider in these investments, is that there is a higher minimum amount for investment even when the units are offered in a public offer as compared to a normal IPO.'

Q83 MCQ · 1 mark EasyTypes of Public Issues

What is the primary characteristic that distinguishes an Initial Public Offer (IPO) from a Further Public Offer (FPO)?

✓An IPO is made by a company for the first time, while an FPO is made by an issuer that has previously made an IPO.

BAn IPO can only be a fresh issue of shares, whereas an FPO can only be an offer for sale.

CAn IPO is regulated by SEBI, while an FPO is regulated by the Companies Act.

DAn IPO is exclusively for retail investors, while an FPO is exclusively for institutional investors.

💡 The text states: 'The first public offer of shares made by a company is called an Initial Public Offer (IPO).' And 'A Further public offer is made by an issuer that has already made an IPO in the past and now makes a further issue of securities to the public.' This clearly distinguishes an IPO as the first offer and an FPO as a subsequent offer by an issuer who has already made an IPO.

Q84 MCQ · 1 mark MediumIPO Types

In an Initial Public Offer (IPO), what is the key difference regarding who receives the proceeds between a 'Fresh Issue of Shares' and an 'Offer for Sale'?

AIn a Fresh Issue, proceeds go to existing shareholders, while in an Offer for Sale, they go to the company.

✓In a Fresh Issue, proceeds go to the company, while in an Offer for Sale, they go to the existing shareholders selling the shares.

CIn both Fresh Issue and Offer for Sale, proceeds always go to the company.

DIn both Fresh Issue and Offer for Sale, proceeds always go to the existing shareholders.

💡 For a Fresh Issue, the text states: 'New shares are issued by the company to public investors.' For an Offer for Sale, it states: 'The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company.'

Q85 MCQ · 1 mark EasyTypes of Public Issue - IPO

What is the term for the first public offer of shares made by a company, leading to a change in its shareholding pattern from privately held to widely held?

AFurther Public Offer (FPO)

BRights Issue

✓Initial Public Offer (IPO)

DPrivate Placement

💡 The text defines 'Initial Public Offer (IPO)' as 'The first public offer of shares made by a company.'

Q86 MCQ · 1 mark HardPricing a Public Issue (Book Building)

A company wants to issue 5,000 shares through a book-built offer within a price band of Rs 120 to Rs 144. The bids received are as follows: - Rs 144: 1000 shares - Rs 140: 1500 shares - Rs 135: 2500 shares - Rs 130: 1000 shares - Rs 120: 500 shares What is the cut-off price for this issue?

ARs 144

BRs 140

✓Rs 135

DRs 130

💡 To find the cut-off price, sum the bids from the highest price downwards until the total demand meets or exceeds the offered number of shares (5,000). - At Rs 144: 1,000 shares - At Rs 140 (cumulative with Rs 144): 1,000 + 1,500 = 2,500 shares - At Rs 135 (cumulative with Rs 144 and Rs 140): 2,500 + 2,500 = 5,000 shares The offer of 5,000 shares is filled up at the cut-off price of Rs.135.

Q87 MCQ · 1 mark MediumApplying to a Public Issue

Which of the following best describes the ASBA (Application Supported by Blocked Amount) facility in the context of applying to a public issue?

AIt is a payment mechanism where the investor directly transfers the application money to the issuer's bank account upon application.

✓It is an authorization to the investor's bank to block the application money in their account and release funds only upon allotment.

CIt allows investors to make multiple bids at different prices in a fixed price issue.

DIt is a facility used by Qualified Institutional Buyers (QIBs) to get a discount on the cut-off price.

💡 The text defines ASBA as 'an application for subscription to an issue containing an authorization to the investors’ bank to block the application money in the bank account and release funds only on allotment.'

Q88 MCQ · 1 mark EasyPublic Sector Units

What is the term used when the government offers a portion of its shares held in Public Sector Units (PSUs) to the public?

AFresh Issue

✓Disinvestment

CShare Buyback

DRights Issue

💡 The text states, 'These companies may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

Q89 MCQ · 1 mark EasyIssuers of Securities

Which of the following instruments is exclusively issued by the central government for maturities such as 91 days, 182 days, and 364 days?

ACorporate Bonds

BCommercial Papers

✓Treasury Bills

DPreference Shares

💡 The text states, 'The central government alone issues treasury bills for different maturities such as 91 days, 182 days and 364 days.'

Q90 MCQ · 1 mark MediumPublic Sector Units (PSUs) Bonds

Regarding bonds issued by Public Sector Units (PSUs), which of the following statements is accurate according to the provided text?

AInterest earned on all PSU bonds is exempt from tax.

BTax-free bonds issued by PSUs are primarily available only through fresh primary issuances.

✓Some PSU bonds may provide tax benefits, such as exemption from tax for interest earned or for saving on long-term capital gains.

DThe National Highway Authority of India (NHAI) stopped issuing tax-free bonds in January 2014.

💡 The text states: 'Some of the bonds may provide tax benefits to investors in the form of exemption from tax for interest earned on them or to save on long-term capital gains.' This confirms option C. Option A is incorrect because the text says 'Some of the bonds may provide tax benefits,' not all. Option B is incorrect as the text mentions 'there has not been any fresh primary issuance [of tax-free bonds] over approx. 8 years. Tax-free bonds are available in the secondary market.' Option D is incorrect; the text states NHAI 'made an issue of tax-free bonds in January 2014,' but it does not say they stopped issuing them after that date.

Q91 MCQ · 1 mark EasyIssuers of Securities

Which type of entity raises funds through a 'New Fund Offer (NFO)' of units in the domestic markets for a defined scheme?

APublic Sector Units

BPrivate Sector Companies

✓Mutual Funds

DNon-Banking Finance Companies

💡 The text mentions: 'Mutual Funds make a new fund offer (NFO) of units in the domestic markets to raise funds for a defined scheme.'

Q92 MCQ · 1 mark HardSources of Funds and Issue Characteristics

Which of the following statements about different sources of funds and issue characteristics is INCORRECT according to the provided text?

AAlternative Investment Funds (AIFs) typically raise money through a private placement and cannot invite the public at large.

✓Tax-free bonds, where the interest is exempt from tax, have seen fresh primary issuances over the last approximately 8 years.

CCorporate bonds are issued by private sector companies to raise long-term debt capital, while commercial papers are for short-term debt capital (less than one year).

DReal Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) units, even in a public offer, typically have a higher minimum investment amount compared to a normal IPO.

💡 Option B is incorrect. The text explicitly states: 'For tax free bonds, where the coupon (interest) is free of tax, there has not been any fresh primary issuance over approx. 8 years. Tax-free bonds are available in the secondary market.' Options A, C, and D are all correct statements based on the provided text.

Q93 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

In which type of public issue do the proceeds from the sale of shares go to the existing shareholders rather than the company, and the share capital of the company does not change?

AFresh Issue of Shares

✓Offer for Sale

CRights Issue

DQualified Institutional Placement

💡 The text explains: 'Offer for Sale: ... The share capital of the company does not change since the company is not making a new issue of shares. The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company.'

Q94 MCQ · 1 mark MediumBook Built Issue Pricing

A company wants to issue 5000 shares through a book-built offer within a price band of Rs 120 to Rs 144. Bids are received as follows: - Rs 144: 1000 shares - Rs 140: 1500 shares - Rs 135: 2500 shares - Rs 130: 1000 shares - Rs 120: 500 shares Based on this data, what would be the cut-off price for the issue, and which investors would be eligible for allotment?

ACut-off price Rs 144; only investors bidding at Rs 144 are eligible.

BCut-off price Rs 140; investors bidding at Rs 140 or higher are eligible.

✓Cut-off price Rs 135; investors bidding at Rs 135 or higher are eligible.

DCut-off price Rs 130; investors bidding at Rs 130 or higher are eligible.

💡 The text provides this exact example and states: 'The offer of 5,000 shares is filled up at the cut-off price of Rs.135. All investors who bid at this price and higher are eligible for allotment in their respective categories.' To verify, cumulative demand at Rs 135 is 1000 (at Rs 144) + 1500 (at Rs 140) + 2500 (at Rs 135) = 5000 shares, which matches the offered shares.

Q95 MCQ · 1 mark MediumApplication Process

What is the mandatory facility that investors must use when applying to a public issue, which involves blocking the application money in their bank account and releasing funds only upon allotment?

ARTGS (Real Time Gross Settlement)

BNEFT (National Electronic Funds Transfer)

✓ASBA (Application Supported by Blocked Amount)

DUPI (Unified Payment Interface) without blocking facility

💡 The text explicitly states, 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility. ASBA is an application for subscription to an issue containing an authorization to the investors’ bank to block the application money in the bank account and release funds only on allotment.'

Q96 MCQ · 1 mark MediumPublic Issues of Equity Shares

Which of the following statements is true regarding a 'Fresh Issue of Shares' in a public offering?

AThe share capital of the company does not change.

BThe proceeds from the issue primarily go to the existing shareholders.

CThe percentage holding of existing shareholders will increase.

✓The issued share capital of the company increases.

💡 The text explains: 'Fresh Issue of Shares: New shares are issued by the company to public investors. The issued share capital of the company increases. The percentage holding of existing shareholders will come down due to the issuance of new shares.'

Q97 MCQ · 1 mark EasyPrivate Sector Companies

For private sector companies, which of the following instruments is typically issued to raise funds for less than one year (short-term debt capital)?

AOrdinary equity shares

BCorporate bonds

CPreference shares

✓Commercial papers

💡 The text states: 'Corporate bonds are issued to raise long-term debt capital while commercial papers are issued to raise funds for less than one year (short-term debt capital).'

Q98 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

In the context of a public issue of equity shares, what is the primary difference between a 'Fresh Issue of Shares' and an 'Offer for Sale'?

AA Fresh Issue is for debt securities, while an Offer for Sale is for equity shares.

✓In a Fresh Issue, the company's issued share capital increases, whereas in an Offer for Sale, it does not change.

CA Fresh Issue is made by existing shareholders, while an Offer for Sale is made by the company.

DA Fresh Issue's proceeds go to the selling shareholders, while an Offer for Sale's proceeds go to the company.

💡 The text differentiates: 'Fresh Issue of Shares: New shares are issued by the company to public investors. The issued share capital of the company increases.' and 'Offer for Sale: Existing shareholders... offer a part of their holding to the public investors. The share capital of the company does not change since the company is not making a new issue of shares.'

Q99 MCQ · 1 mark HardPricing a Public Issue of Shares - Book Built Issue

In a book-built issue, if the issue is over-subscribed and the cut-off price is determined, which of the following statements regarding allotment and pricing is most accurate?

AAll investors who bid at or above the cut-off price are successful bidders and receive allotment at their respective bid prices.

BRetail investors are eligible for a discount of up to 20% below the cut-off price, irrespective of their bid price.

✓All allottees who bid at or above the cut-off price are successful bidders and are eligible for allotment at the cut-off price.

DInvestors who bid lower than the cut-off price will receive partial allotment at the cut-off price.

💡 The text states: 'All allottees who bid at or above the cut-off price are successful bidders and are eligible for allotment in the respective categories.' It further clarifies: 'All investors who bid at the cut-off price or higher are successful bidders and receive allotment at the cut-off price.' Option A is incorrect because allotment is at the cut-off price, not individual bid prices. Option B is incorrect as the retail discount is 'not lower than by more than ten percent' (not 20%) of the price allotted to other categories. Option D is incorrect as 'Investors who bid lower than the cut-off price will receive the refund of their application amount,' not partial allotment.

Q100 MCQ · 1 mark HardTypes of Public Issue - FPO

A company that has previously made an Initial Public Offer (IPO) now decides to issue additional equity capital to fund its expansion plans. This subsequent offering could be categorized as:

AA Rights Issue, only if offered to existing shareholders.

BAn Initial Public Offer (IPO) if it's the first time raising equity for expansion.

✓A Further Public Offer (FPO), which can include a fresh issue of capital.

DA Private Placement, if it aims to increase public shareholding.

💡 The text states: 'A Further public offer is made by an issuer that has already made an IPO in the past and now makes a further issue of securities to the public. When a company wants additional capital for growth or to redo its capital structure by retiring debt, it raises equity capital through a fresh issue of capital in a follow-on public offer.'

Q101 MCQ · 1 mark HardIssuers of Securities & Regulatory Norms

Consider the following statements regarding different types of issuers and their fundraising methods: I. Public Sector Units (PSUs) may issue bonds that provide tax benefits to investors, such as exemption from tax for interest earned. II. Alternative Investment Funds (AIFs) are designed to raise money through invitations to the public at large. III. Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) typically have a higher minimum investment amount for public offers compared to a normal IPO. Which of the statements given above is/are correct?

AI and II only

✓I and III only

CII and III only

DI, II and III

💡 Statement I is correct: The text states under 'b. Public Sector Units' that 'Some of the bonds may provide tax benefits to investors in the form of exemption from tax for interest earned on them... For example, the National Highway Authority of India (NHAI) made an issue of tax-free bonds in January 2014. The interest earned by investors on these bonds is exempt from tax.' Statement II is incorrect: The text states under 'g. Alternative Investment Funds' that 'An AIF cannot make an invitation to the public at large to raise money.' They raise money through private placement. Statement III is correct: The text states under 'f. Real Estate Investment Trusts and Infrastructure Investment Trusts' that 'An important factor to consider in these investments, is that there is a higher minimum amount for investment even when the units are offered in a public offer as compared to a normal IPO.'

Q102 MCQ · 1 mark MediumPricing a Public Issue of Shares

An issuer is planning a public issue of shares and opts for a Book Built Issue. Which of the following statements is a characteristic of this pricing method as described in the text?

AThe company, in consultation with the lead manager, decides on a single fixed price at which shares will be issued.

✓Investors are required to bid within a specified price band, which typically ranges from a floor price up to 20% above it.

CAll allottees, regardless of their bid price, receive shares at a price determined solely by the issuer after the issue closes.

DRetail investors are explicitly prohibited from revising their bids once the issue is open for subscription.

💡 The text states under 'b. Book Built Issue': 'The company and its issue managers will specify either a floor price (base price) or a price band (price range starting from floor price to 20% above it) within which investors can bid.' Option A describes a Fixed Price Issue. Option C is incorrect as the cut-off price is determined by the bidding process, and only bids at or above it are successful. Option D is incorrect as 'Retail investors can revise the bids in the period when the issue is open.'

Q103 MCQ · 1 mark MediumApplying to a Public Issue

Which of the following statements is TRUE regarding the application process for a public issue in India, as per the provided text?

✓Investors are required to use the ASBA (Application Supported by Blocked Amount) facility for all applications in a public issue.

BRetail investors are prohibited from revising their bids once submitted in a book-built issue.

CIn an over-subscribed issue, all successful bidders receive full allotment of shares applied for, irrespective of demand.

DThe minimum application value for a book-built offer is uniformly Rs. 5,000 across all issues.

💡 The text explicitly states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.' Option B is false because 'Retail investors can revise the bids in the period when the issue is open.' Option C is false because 'In an over-subscribed issue, the shares will be allotted to an investor on a proportionate basis.' Option D is false because 'the minimum application value adheres to the SEBI prescribed range of Rs.10,000 to Rs. 15,000.'

Q104 MCQ · 1 mark MediumBook Built Issue Pricing

In a book-built issue, what defines the cut-off price and who is eligible for allotment at this price?

AThe lowest price bid by any investor, and only investors bidding exactly at this price are eligible.

✓The price determined by the issuer and lead manager at which the issue gets subscribed, and all investors bidding at or above this price are eligible.

CThe highest price within the specified price band, and only institutional investors are eligible.

DThe floor price, and all investors who bid at or above the floor price are eligible.

💡 The text states: 'The issuer, in consultation with the book running lead manager will decide on the cut-off price which is the price at which the issue gets subscribed. All allottees who bid at or above the cut-off price are successful bidders and are eligible for allotment in the respective categories.'

Q105 MCQ · 1 mark MediumPublic Issue Application Process

Which mechanism is mandatory for making applications in a public issue, and what new payment method has SEBI introduced for retail investors in conjunction with this mandatory mechanism?

ADemand Draft; Real-Time Gross Settlement (RTGS)

BElectronic Funds Transfer (EFT); National Electronic Funds Transfer (NEFT)

✓Application Supported by Blocked Amount (ASBA); Unified Payment Interface (UPI)

DCheque Payment; Immediate Payment Service (IMPS)

💡 The text states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.' It further adds: 'SEBI has introduced the use of Unified Payment Interface (UPI) with facility of blocking Funds (ASBA facility), as a new payment mechanism for retail investor applications submitted through intermediaries.'

Q106 MCQ · 1 mark EasyTypes of Issuers

Which type of investment vehicle is described as making a New Fund Offer (NFO) of units in the domestic markets, either for a specific period (closed-end) or for perpetuity with an exit option (open-ended)?

AReal Estate Investment Trust (REIT)

BAlternative Investment Fund (AIF)

CPublic Sector Unit (PSU)

✓Mutual Fund

💡 Under the section 'e. Mutual Funds', the text states: 'Mutual Funds make a new fund offer (NFO) of units in the domestic markets to raise funds for a defined scheme. The funds are raised for a specific period after which the current value of the units is returned to the investors (Closed-end fund) or it may be for perpetuity with investors being given the option to exit at any time at the prevailing value of the units.'

Q107 MCQ · 1 mark EasyMutual Funds

A Mutual Fund scheme designed to raise funds for a specific period, after which the current value of the units is returned to the investors, is categorized as a/an:

AOpen-end fund

✓Closed-end fund

CExchange Traded Fund (ETF)

DAlternative Investment Fund (AIF)

💡 The text states, 'The funds are raised for a specific period after which the current value of the units is returned to the investors (Closed-end fund)'.

Q108 MCQ · 1 mark MediumPublic Sector Units & Disinvestment

Which of the following statements accurately describes 'disinvestment' as it relates to Public Sector Units (PSUs) in the context of a share issue?

ADisinvestment occurs when a PSU issues fresh equity shares to increase its capital, leading to an increase in the company's issued share capital.

✓Disinvestment refers to the government offering a portion of the shares it holds in a PSU to the public, with the proceeds going to the government.

CDisinvestment is the process by which a PSU raises long-term debt capital through the issuance of corporate bonds that provide tax benefits.

DDisinvestment is when a PSU buys back its own shares from the public to reduce the government's shareholding.

💡 The text explicitly defines disinvestment: 'These companies [PSUs] may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.' It further clarifies: 'The proceeds collected go to the government which is selling the shares and not to the company.'

Q109 MCQ · 1 mark MediumInvestment Trusts

What is a key difference between Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) according to the provided text?

AREITs invest in infrastructure projects, while InvITs invest in real estate.

BREITs and InvITs can only raise funds through private placement, not public offers.

✓REITs invest in real estate, while InvITs invest in infrastructure projects.

DInvITs are managed by merchant bankers, but REITs are not.

💡 The text explicitly states, 'REIT invest in real estate while InvIT do so in infrastructure projects.'

Q110 MCQ · 1 mark EasyApplication Process

What is the mandatory facility required for making applications in a public issue of securities?

AReal Time Gross Settlement (RTGS)

BNational Electronic Funds Transfer (NEFT)

✓Application Supported by Blocked Amount (ASBA)

DImmediate Payment Service (IMPS)

💡 The text states, 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.'

Q111 MCQ · 1 mark MediumApplying to a Public Issue

What is the primary function of the ASBA (Application Supported by Blocked Amount) facility in applying to a public issue?

AIt allows investors to trade shares immediately after applying, even before allotment.

✓It authorizes the investor's bank to block the application money in the bank account and release funds only upon allotment.

CIt provides a credit line to investors to fund their applications, which is repaid after allotment.

DIt guarantees allotment of shares to all applicants, irrespective of oversubscription.

Q112 MCQ · 1 mark EasyApplying to a Public Issue

Which mandatory facility allows an investor's bank to block the application money for a public issue of securities and release funds only upon allotment?

AReal Time Gross Settlement (RTGS)

BNational Electronic Funds Transfer (NEFT)

✓Application Supported by Blocked Amount (ASBA)

DUnified Payment Interface (UPI)

💡 The text states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility. ASBA is an application for subscription to an issue containing an authorization to the investors’ bank to block the application money in the bank account and release funds only on allotment.' While UPI is mentioned as a payment mechanism that can be used with the ASBA facility, ASBA itself is the mandatory facility.

Q113 MCQ · 1 mark MediumTypes of Public Issue of Equity Shares

In the context of a public issue of equity shares, which of the following statements accurately describes an 'Offer for Sale'?

ANew shares are issued by the company, increasing its issued share capital, with proceeds going to the company.

BExisting shareholders sell a portion of their holdings to the public, resulting in an increase in the company's share capital.

✓Existing shareholders sell a portion of their holdings to the public, with the proceeds going to the selling shareholders and no change in the company's share capital.

DThe company issues new shares to meet public shareholding requirements, and the percentage holding of existing shareholders remains unchanged.

Q114 MCQ · 1 mark HardPricing a Public Issue of Shares

Based on the provided book-built issue example, if a company wants to issue 5000 shares, and bids are received as follows: Rs 144 (1000 shares), Rs 140 (1500 shares), Rs 135 (2500 shares), Rs 130 (1000 shares), Rs 120 (500 shares). Which of the following statements is correct regarding the cut-off price and successful bidders?

AThe cut-off price is Rs. 144, and only investors who bid at Rs. 144 are eligible for allotment.

BThe cut-off price is Rs. 130, as it is the lowest price at which the issue is fully subscribed.

✓The cut-off price is Rs. 135, and investors who bid at Rs. 135 or higher are eligible for allotment.

DThe cut-off price is Rs. 120, and all investors who bid at this price or higher are eligible for allotment.

💡 The example states: 'The offer of 5,000 shares is filled up at the cut-off price of Rs.135. All investors who bid at this price and higher are eligible for allotment in their respective categories.' This is because bids at Rs 144 (1000), Rs 140 (1500), and Rs 135 (2500) cumulatively sum up to 5000 shares, which is the total offer size.

Q115 MCQ · 1 mark MediumRegulatory Norms - Prospectus

What is the name of the document that a company making a public issue of shares must file with SEBI, containing information about the issuer, proposed issue, operations, finances, promoters, and use of funds?

AAnnual Report

BMemorandum of Association

CArticles of Association

✓Prospectus

💡 The text states, 'The company making a public issue of shares has to file with SEBI a document giving all information of the issuer and the proposed issue such as the operations and finances of the company, the current and future projects, the details of the promoters of the company, the proposed use of funds raised and details of the shares being issued such as the number of shares being raised and the price band. This document is called a prospectus.'

Q116 MCQ · 1 mark MediumApplying to a Public Issue

According to the provided text, which facility is mandatory for investors when making applications in a public issue?

AUnified Payment Interface (UPI) facility for all categories of investors.

✓Application Supported by Blocked Amount (ASBA) facility.

CDirect transfer of funds to the issuer's bank account.

DSubmission of physical cheques along with the application form.

💡 The text explicitly states: 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility.' While UPI is mentioned as a new payment mechanism *with* ASBA for retail investors, ASBA itself is the mandatory facility for all applications.

Q117 MCQ · 1 mark HardApplying to a Public Issue

If a book-built issue is over-subscribed and an investor has successfully bid at the cut-off price, what is the most likely outcome for their application?

AThe investor will receive a full refund of their application amount because the issue was over-subscribed.

BThe investor will receive a full allotment of the shares they applied for, as they bid at the cut-off price.

✓The investor will receive an allotment of shares on a proportionate basis, and a refund for any non-allotted shares.

DThe investor's application will be rejected, and they will be asked to reapply in the secondary market.

💡 The text states: 'In an over-subscribed issue, the shares will be allotted to an investor on a proportionate basis. There will be a refund made to the extent that the shares allotted are lower than the shares applied for.'

Q118 MCQ · 1 mark MediumTypes of Public Issue - Fresh Issue vs. Offer for Sale

In the context of a public issue of shares, what is the primary difference between a 'Fresh Issue of Shares' and an 'Offer for Sale'?

AIn a Fresh Issue, existing shareholders sell their shares, while in an Offer for Sale, the company issues new shares.

✓In a Fresh Issue, the company's issued share capital increases, and proceeds go to the company, whereas in an Offer for Sale, the share capital does not change, and proceeds go to selling shareholders.

CA Fresh Issue is always an IPO, while an Offer for Sale is always an FPO.

DA Fresh Issue is regulated by SEBI, while an Offer for Sale is regulated by the Companies Act.

💡 The text states: 'Fresh Issue of Shares: New shares are issued by the company to public investors. The issued share capital of the company increases. ... Offer for Sale: Existing shareholders...offer a part of their holding to the public investors. The share capital of the company does not change since the company is not making a new issue of shares. The proceeds from the IPO go to the existing shareholders who are selling the shares and not to the company.'

Q119 MCQ · 1 mark EasyPublic Issues of Equity Shares

What is the term for the first public offer of shares made by a company?

AFurther Public Offer (FPO)

✓Initial Public Offer (IPO)

CPrivate Placement

DRights Issue

💡 The text defines: 'The first public offer of shares made by a company is called an Initial Public Offer (IPO).'

Q120 MCQ · 1 mark EasyAlternative Investment Funds (AIFs)

How do Alternative Investment Funds (AIFs) primarily raise money, as stated in the text?

AThrough a New Fund Offer (NFO) to the public at large.

BBy issuing units in a public offer listed on a stock exchange.

✓Through a private placement, without inviting the public at large.

DBy directly accessing low-cost funds from the public.

Q121 MCQ · 1 mark MediumApplying to a Public Issue - ASBA

For applying to a public issue of securities, what mandatory facility allows investors' banks to block the application money in the bank account and release funds only upon allotment?

ARTGS (Real Time Gross Settlement)

BNEFT (National Electronic Funds Transfer)

✓ASBA (Application Supported by Blocked Amount)

DECS (Electronic Clearing Service)

💡 The text clearly states, 'Applications made in a public issue must be made only using the ASBA (Application Supported by Blocked Amount) facility. ASBA is an application for subscription to an issue containing an authorization to the investors’ bank to block the application money in the bank account and release funds only on allotment.'

Q122 MCQ · 1 mark EasyRegulatory Norms

Which regulatory body's regulations specifically cover the eligibility of a company to make a public issue in terms of net-worth and track record of profitability?

AReserve Bank of India (RBI)

BMinistry of Corporate Affairs (MCA)

✓Securities and Exchange Board of India (SEBI)

DNational Stock Exchange (NSE)

💡 The text states: 'Primary market offerings are subject to regulatory requirements laid down by Securities and Exchange Board of India (SEBI) in the SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018... The regulations cover the eligibility of a company to make a public issue in terms of net-worth and track record of profitability...'

Q123 MCQ · 1 mark EasyApplying to Public Issues

Which facility is mandatory for making applications in a public issue of securities, where the investor's bank blocks the application money and releases funds only upon allotment?

ANEFT (National Electronic Funds Transfer)

BRTGS (Real Time Gross Settlement)

✓ASBA (Application Supported by Blocked Amount)

DUPI (Unified Payment Interface) without blocking funds

Q124 MCQ · 1 mark EasyRegulatory Norms

Which regulatory body lays down the primary market offering requirements through its Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018?

AReserve Bank of India (RBI)

BMinistry of Finance

✓Securities and Exchange Board of India (SEBI)

DRegistrar of Companies (RoC)

💡 The text states, 'Primary market offerings are subject to regulatory requirements laid down by Securities and Exchange Board of India (SEBI) in the SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018'.

Q125 MCQ · 1 mark MediumPublic Sector Units (PSUs) - Disinvestment

When the government, as a majority shareholder in a Public Sector Unit (PSU), offers a portion of its shares to the public, this process is specifically known as:

AFresh Issue of Equity

BInitial Public Offer (IPO)

✓Disinvestment

DCorporate Restructuring

💡 The text states, 'These companies may make an issue of shares where the government offers a portion of the shares held by them to the public. This is called disinvestment.'

About this content: These practice questions are based on the NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination Workbook published by the National Institute of Securities Markets (NISM), Mumbai. NISM is a SEBI-established institution. Questions cover Securities Market Segments with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI. Last updated: July 08, 2026.

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