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?
(a)Only one
(b)Only two
(c)Only three
(d)All the four
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Financial Markets & Capital Markets — UPSC Prelims Previous Year Questions
40 questions from UPSC CSE Prelims GS Paper 1 on Financial Markets & Capital Markets (Indian Economy). Spanning from 1995 to 2025. Practice with show/hide answers and detailed explanations.
40
Questions
22
Years
20
Easy
18
Moderate
Year-wise Distribution
What UPSC Asks About Financial Markets & Capital Markets
Based on 40 questions across 22 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.
Related Indian Economy Sub-topics
All Financial Markets & Capital Markets Questions
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?
(a)I and II only
(b)II and III only
(c)I and III only
(d)I, II and III
Q: भारतीय अर्थव्यवस्था के संदर्भ में, “पंचानुगिकृत व्यापार लेन-देन संबंधी दस्तावेज (इंस्ट्रूमेंट)” निम्नलिखित में से किसे निरूपित करते हैं ?
(a)बॉण्ड बाजार
(b)विदेशी मुद्रा बाजार
(c)पूंजी मुद्रा बाजार
(d)शेयर (स्टॉक) बाजार
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:
(a)1 and 2 only
(b)2 and 3 only
(c)1 and 3 only
(d)1, 2 and 3
Q: Consider the following: 1. Exchange-Traded Funds (ETF) 2. Motor vehicles 3. Currency swap Which of the above is/are considered financial instruments?
(a)1 only
(b)2 and 3 only
(c)1, 2 and 3
(d)1 and 3 only
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?
(a)Only one
(b)Only two
(c)Only three
(d)All four
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?
(a)Only one
(b)Only two
(c)Only three
(d)All four
Q: In the context of finance, the term ‘beta’ refers to
(a)the process of simultaneous buying and selling of an asset from different platforms
(b)an investment strategy of a portfolio manager to balance risk versus reward
(c)a type of systemic risk that arises where perfect hedging is not possible
(d)a numeric value that measures the fluctuations of a stock to changes in the overall stock market
Q: भारतीय अर्थव्यवस्था के संदर्भ में, 'मुद्रास्फीति-संलग्न बांड (Inflation-Indexed Bonds — IIBs)' के क्या लाभ हैं? 1. सरकार IIBs के रूप में अपने ऋणग्रण पर कूपन दरों को कम कर सकती है। 2. IIBs निवेशकों को मुद्रास्फीति के बारे में अनिश्चितता से सुरक्षा प्रदान करते हैं। 3. IIBs पर प्राप्त ब्याज और साथ-साथ पूंजीगत लाभ कर-योग्य नहीं होते। उपयुक्त कथनों में कौन-से सही हैं?
(a)केवल 1 और 2
(b)केवल 2 और 3
(c)केवल 1 और 3
(d)1, 2 और 3
Q: निम्नलिखित कथनों पर विचार कीजिए : 1. भारत में, सावधि क्षमता-निर्धारण एजेन्सियाँ (क्रेडिट रेटिंग एजेन्सीज) भारतीय रिज़र्व बैंक द्वारा विनियमित होती हैं। 2. ICRA नाम से जानी जाने वाली क्षमता-निर्धारण एजेन्सी एक परिकर लिमिटेड कम्पनी है। 3. क्रिसिल रेटिंग्स एक भारतीय सावधि क्षमता-निर्धारण एजेन्सी है। उपयुक्त कथनों में कौन-से सही हैं ?
(a)केवल 1 और 2
(b)केवल 2 और 3
(c)केवल 1 और 3
(d)1, 2 और 3
Q: परिवर्तनीय बॉण्ड के सन्दर्भ में, निम्नलिखित कथनों पर विचार कीजिए : 1. सूझबूझ बॉण्ड को इक्विटी के लिए बदलने का विकल्प है, परिवर्तनीय बॉण्ड अपेक्षाकृत कम ब्याज दर का भुगतान करते हैं। 2. इक्विटी के लिए बदलने का विकल्प बॉण्ड-धारक को बढ़ती हुई उपभोक्ता कंपनियों में सहभागिता की मात्रा प्रदान करता है। उपयुक्त कथनों में कौन-से सही हैं ?
(a)केवल 1
(b)केवल 2
(c)1 और 2 दोनों
(d)न तो 1, न ही 2
Q: भारतीय सरकारी बांड प्रतिफल (Government Bond Yields) निम्नलिखित में से किससे/किनसे प्रभावित होता है/होते हैं? 1. यूनाइटेड स्टेट्स फेडरल रिज़र्व की कार्रवाइयाँ 2. भारतीय रिज़र्व बैंक की कार्रवाइयाँ 3. मुद्रास्फीति एवं अल्पकालिक ब्याज दर नीचे दिए गए कूट का प्रयोग कर सही उत्तर चुनिए।
(a)केवल 1 और 2
(b)केवल 2
(c)केवल 3
(d)1, 2 और 3
Q: भारत के संदर्भ में, निम्नलिखित कथनों पर विचार कीजिए : 1. खुदरा निवेशक डिमैट खातों के माध्यम से प्राथमिक बाजार में 'ट्रेज़री बिल' और 'भारत सरकार के ऋण बॉण्ड' में निवेश कर सकते हैं। 2. 'नेगोशिएटेड डीलिंग सिस्टम-ऑर्डर मैचिंग' भारतीय रिज़र्व बैंक का सरकारी प्रतिभूति व्यापार मंच है। 3. 'सेंट्रल डिपॉज़िटरी सर्विसेज लिमिटेड' का संयुक्त रूप से भारतीय रिज़र्व बैंक और बॉम्बे स्टॉक एक्सचेंज द्वारा प्रवर्तन किया जाता है। उपयुक्त कथनों में से कौन-सा/कौन-से सही है/हैं?
(a)केवल 1
(b)1 और 2
(c)केवल 3
(d)2 और 3
Q: The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of
(a)Crude oil
(b)Bullion
(c)Rare earth elements
(d)Uranium
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 ?
(a)1 and 2 only
(b)4 only
(c)1 and 3 only
(d)2, 3 and 4 only
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?
(a)Certificate of Deposit
(b)Commercial Paper
(c)Promissory Note
(d)Participatory Note
Q: निम्नलिखित कथनों पर विचार कीजिए: 1. भारतीय रिज़र्व बैंक, भारत सरकार की प्रतिभूतियों का प्रबंधन और प्रचालन करता है किन्तु किसी राज्य सरकार की प्रतिभूतियों का नहीं। 2. भारत सरकार कोष-पत्र (ट्रेज़री बिल) जारी करती है और राज्य सरकारें कोई कोष-पत्र जारी नहीं करतीं। 3. कोष-पत्र अक्सर अपने सममूल्य से कटे हुए पर जारी किए जाते हैं। उपरोक्त कथनों में से कौन-सा/से सही है/हैं?
(a)केवल 1 और 2
(b)केवल 3
(c)केवल 2 और 3
(d)1, 2 और 3
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.
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2
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.
(a)1 only
(b)2 and 3 only
(c)1 and 3 only
(d)1, 2 and 3
Q: What does venture capital mean?
(a)A short-term capital provided to industries
(b)A long-term start-up capital provided to new entrepreneurs
(c)Funds provided to industries at times of incurring losses
(d)Funds provided for replacement and renovation of industries
Q: In the parlance of financial investments, the term ‘bear’ denotes
(a)An investor who feels that the price of a particular security is going to fall
(b)An investor who expects the price of particular shares to rise
(c)A shareholder or a bondholder who has an interest in a company, financial or otherwise
(d)Any lender whether by making a loan or buying a bond
Q: In India, which of the following is regulated by the Forward Markets Commission ?
(a)Currency Futures Trading
(b)Commodities Futures Trading
(c)Equity Futures Trading
(d)Both Commodities Futures and Financial Futures Trading
Q: Which one of the following pairs is not correctly matched?
(a)Japan : Nikkei
(b)Singapore : Shcomp
(c)UK : FTSE
(d)USA : Nasdaq
Q: In the context of Indian news in recent times, what is MCX-SX ?
(a)A kind of supercomputer
(b)Title of Moon Impact Probe
(c)Stock exchange
(d)Nuclear-powered submarine
Q: What does S & P 500 relate to?
(a)Supercomputer
(b)A new technique in e-business
(c)A new technique in bridge building
(d)An index of stocks of large companies
Q: Participatory Notes (PNs) are associated with which one of the following?
(a)Consolidated Fund of India
(b)Foreign Institutional Investors
(c)United Nations Development Programme
(d)Kyoto Protocol
Q: What is IndoNext which was launched in January, 2005?
(a)A new scheme to promote Indian tourism
(b)A new scheme to promote export of Indian handicrafts
(c)An association of the Non-Resident Indians to organize Pravasi Bharatiya Divas every year in India
(d)An alternative trading platform being promoted by the Bombay Stock Exchange and Regional Stock Exchanges
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?
(a)2 only
(b)1 and 3
(c)2 and 3
(d)None
Q: Debenture holders of a company are its
(a)Shareholders
(b)Creditors
(c)Debtors
(d)Directors
Q: Among the following major stock exchanges of India, which one recorded the highest turnover during the year 2001-02?
(a)Bombay Stock Exchange
(b)Calcutta Stock Exchange
(c)Delhi Stock Exchange
(d)National Stock Exchange
Q: Gilt-edged market means
(a)bullion market
(b)market of Government securities
(c)market of guns
(d)market of pure metals
Q: The upper part of the graph is a hypothetical movement in the BSE Sensex over a few months and the lower part is the fluctuation in the average value of automobile shares in the same period (actual values not given). Which one of the following inferences can be drawn from the graphs?
(a)The automobile share market has been as unstable as BSE Sensex in that period
(b)There has been a major political change in June/July
(c)Automobile shares have shown a steady improvement in price, unaffected by large fluctuations in BSE Sensex
(d)None of the above
Q: A rise in ‘SENSEX’ means
(a)a rise in prices of shares of all companies registered with Bombay Stock Exchange
(b)a rise in prices of shares of all companies registered with National Stock Exchange
(c)an overall rise in prices of shares of group of companies registered with Bombay Stock Exchange
(d)a rise in prices of shares of all companies belonging to a group of companies registered with Bombay Stock Exchange
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:
(a)I, II and III
(b)II and III
(c)I and II
(d)I and III
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: To prevent recurrence of scams in Indian Capital Market, the Government of India has assigned regulatory powers to
(a)SEBI
(b)RBI
(c)SBI
(d)IDBI
Q: Which one of the following is the largest mutual fund organisation in India?
(a)SBI Mutual Fund
(b)GIC Mutual Fund
(c)Industrial Bank Mutual Fund
(d)Unit Trust of India
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?
(a)Investor 2 has made the best investment
(b)Investor 1 has made the best investment
(c)Investor 2 suffered a net loss during the year
(d)Investor 3 suffered a net loss during the year
Frequently Asked Questions
How many UPSC Prelims questions have been asked from Financial Markets & Capital Markets?▼
UPSC has asked 40 questions on Financial Markets & Capital Markets in GS Paper 1 Prelims between 1995 and 2025. 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: 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 22 out of 31 years.
What is the difficulty level of Financial Markets & Capital Markets questions in UPSC Prelims?▼
Among 40 questions on Financial Markets & Capital Markets: 20 are easy, 18 are moderate, and 2 are difficult. Most questions test conceptual understanding of the topic.