Financial Markets & Capital Markets — UPSC Prelims Previous Year Questions
41 questions from UPSC CSE Prelims GS Paper 1 on Financial Markets & Capital Markets (Indian Economy). Spanning from 1995 to 2026. Practice with show/hide answers.
What UPSC Asks About Financial Markets & Capital Markets
Based on 41 questions across 23 years, UPSC has consistently tested aspirants' understanding of Financial Markets & Capital Markets within the broader Indian Economy syllabus. The questions range from factual recall to application-based analysis.
Recent trends show UPSC moving towards statement-based questions that combine multiple aspects of Financial Markets & Capital Markets. Aspirants should focus on understanding concepts rather than memorizing isolated facts.
Q: Which of the following statements about Real-World Assets (RWA) Tokenization are correct ?
1. Tokenization is the process of turning real world assets into digital tokens using blockchain technology.
2. Tokenization of real world assets offers 24 × 7 access, promoting financial inclusion.
3. Tokenization of real world assets will allow the access to high growth investment opportunities for individuals in India.
Select the answer using the code given below :
Q: Which of the following statements about Crowdfunding is/are correct ?
1. Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
2. Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.
Select the answer using the code given below :
Q: With reference to investments, consider the following:
I. Bonds
II. Hedge Funds
III. Stocks
IV. Venture Capital
How many of the above are treated as Alternative Investment Funds?
Q: Consider the following statements:
Statement I: As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.
Statement II: Bondholders are lenders to a company whereas stockholders are its owners.
Statement III: For repayment purpose, bondholders are prioritized over stockholders by a company.
Which one of the following is correct in respect of the above statements?
(a)Both Statement II and Statement III are correct and both of them explain Statement I
(b)Both Statement II and Statement III are correct and only one of them explains Statement I
(c)Only one of the Statements II and III is correct and that explains Statement I
(d)Neither Statement II nor Statement III is correct
Q: Consider the following statements:
I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom.
II. India’s stock market has grown rapidly in the recent past even overtaking Hong Kong’s at some point of time.
III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard.
Which of the statements given above are correct?
Q: In India, which of the following can trade in Corporate Bonds and Government Securities?
1. Insurance Companies
2. Pension Funds
3. Retail Investors
Select the correct answer using the code given below:
Q: Consider the following:
1. Exchange-Traded Funds (ETF)
2. Motor vehicles
3. Currency swap
Which of the above is/are considered financial instruments?
Q: Consider the following statements:
Statement-I:
Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.
Statement-II:
InvITs are recognized as borrowers under the 'Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002'.
Which one of the following is correct in respect of the above statements?
(a)Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
(b)Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
(c)Statement-I is correct but Statement-II is incorrect
(d)Statement-I is incorrect but Statement-II is correct
Q: Consider the following markets:
1. Government Bond Market
2. Call Money Market
3. Treasury Bill Market
4. Stock Market
How many of the above are included in capital markets?
Q: Consider the investments in the following assets:
1. Brand recognition
2. Inventory
3. Intellectual property
4. Mailing list of clients
How many of the above are considered intangible investments?
Q: With reference to the Indian economy, what are the advantages of "Inflation-Indexed Bonds (IIBs)"?
1. Government can reduce the coupon rates on its borrowing by way of IIBs.
2. IIBs provide protection to the investors from uncertainty regarding inflation.
3. The interest received as well as capital gains on IIBs are not taxable.
Which of the statements given above are correct?
Q: Consider the following statements:
1. In India, credit rating agencies are regulated by Reserve Bank of India.
2. The rating agency popularly known as ICRA is a public limited company.
3. Brickwork Ratings is an Indian credit rating agency.
Which of the statements given above are correct?
Q: With reference to Convertible Bonds, consider the following statements:
1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest.
2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.
Which of the statements given above is/are correct?
Q: Indian Government Bond Yields are influenced by which of the following?
1. Actions of the United States Federal Reserve
2. Actions of the Reserve Bank of India
3. Inflation and short-term interest rates
Select the correct answer using the code given below.
Q: With reference to India, consider the following statements :
1. Retail investors through demat account can invest in 'Treasury Bills' and 'Government of India Debt Bonds' in primary market.
2. The 'Negotiated Dealing System-Order Matching' is a government securities trading platform of the Reserve Bank of India.
3. The 'Central Depository Services Ltd.' is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.
Which of the statements given above is/are correct?
Q: With reference to the Indian economy, consider the following statements :
1. ‘Commercial Paper’ is a short-term unsecured promissory note.
2. ‘Certificate of Deposit’ is a long-term instrument issued by the Reserve Bank of India to a corporation.
3. ‘Call Money’ is a short-term finance used for interbank transactions.
4. ‘Zero-Coupon Bonds’ are the interest bearing short-term bonds issued by the Scheduled Commercial Banks to corporations.
Which of the statements given above is/are correct ?
Q: Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?
Q: Consider the following statements:
1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3. Treasury bills offer are issued at a discount from the par value.
Which of the statements given above is/are correct?
Q: With reference to 'IFC Masala Bonds', sometimes seen in the news, which of the statements given below is/are correct?
1. The International Finance Corporation, which offers these bonds, is an arm of the World Bank.
2. They are the rupee-denominated bonds and are a source of debt financing for the public and private sector.
Select the correct answer
using the code given below.
Q: What is/are the purpose/purposes of Government's 'Sovereign Gold Bond Scheme' and 'Gold Monetization Scheme'?
1. To bring the idle gold lying with Indian households into the economy
2. To promote FDI in the gold and jewellery sector
3. To reduce India's dependence on gold imports
Select the correct answer
using the code given below.
Q: Consider the following statements :
1. Sensex is based on 50 of the most important stocks available on the Bombay Stock Exchange (BSE)
2. For calculating the Sensex, all the Sensex stocks are assigned proportional weightage.
3. New York Stock Exchange is the oldest stock exchange in the world.
Which of the statements given above is/are correct?
Q: Which of the following pairs are correctly matched?
I. Dow Jones : New York
II. Hang Seng : Seoul
III. FTSE-100 : London
Select the correct answer using the codes given below:
Q: The behaviour of a fictitious stock market index (comprising a weighted average of the market prices of a selected list of companies including some multinational corporations (MNCs) over a 15-day period is shown in the graph. The behaviour of the MNC’s in the same period is also shown in the second graph.
Which one of the following is a valid conclusion?
(a)MNC’s fell steeper in the period depicted
(b)Share prices of every non-MNC company soared by over 5% on the 12th day
(c)Government announced a policy disfavouring MNC’s on the 11th day
(d)Whatever be the reason favouring market revival on the 12th day, it appears to be relevant only to non-MNC companies
Q: The price fluctuations of 4 scrips in a stock market in the four quarters of a year are shown in the table below. Four different investors had the following portfolios of investment in the four companies throughout the year:
Investor 1: 10 of A, 20 of B, 30 of C and 40 of D
Investor 2: 40 of A, 10 of B, 20 of C and 30 of D
Investor 3: 30 of A, 40 of B, 10 of C and 20 of D
Investor 4: 20 of A, 30 of B, 40 of C and 10 of D
In the light of the above,
which one of the following statements is correct?
How many UPSC Prelims questions have been asked from Financial Markets & Capital Markets?▼
UPSC has asked 41 questions on Financial Markets & Capital Markets in GS Paper 1 Prelims between 1995 and 2026. This sub-topic falls under Indian Economy.
In which years has UPSC asked about Financial Markets & Capital Markets?▼
Questions on Financial Markets & Capital Markets have appeared in UPSC Prelims in the following years: 2026, 2025, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2016, 2014, 2010, 2009, 2008, 2007, 2006, 2005, 2003, 2002, 2000, 1998, 1997, 1995. The topic has appeared in 23 out of 31 years.
What is the difficulty level of Financial Markets & Capital Markets questions in UPSC Prelims?▼
Among 41 questions on Financial Markets & Capital Markets: 20 are easy, 18 are moderate, and 3 are difficult. Most questions test conceptual understanding of the topic.
