Dear Readers, Bank Exam Race for the Year 2018 is already started, To enrich your preparation here we have providing new series of Practice Questions on English language – Section. Candidates those who are preparing for IBPS Clerk Prelims 2018 Exams can practice these questions daily and make your preparation effective.
Direction (1-10): Read the passage carefully and answer the following questions.
Generally market is a place where buyers and sellers meet for the exchange of different goods and services. Financial market is a place where traders meet for the exchange of different financial instruments like commercial bills, shares, bonds, treasury bills for short and long term. Such market plays really an important role in countries with developing economies. Broadly this market is classified in two types- Capital market and Money market. It comprises of other sub markets as well.
The capital market, as it is known, is that segment of the financial market that deals with the effective channeling of medium to long-term funds from the surplus to the deficit unit, means it brings together investors holding capital and companies seeking capital for different business reasons. In other words, a capital market is that part of financial market in which long-term debt or equity-backed securities are bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments.
Capital market consists of a primary and a secondary market.
When a company publicly sells new stocks and bonds for the first time, it does so in the primary capital market. In many cases, this takes the form of an initial public offering (IPO).
The main function of the primary market is capital formation by raising funds for the companies, governments, institutions etc. It helps investors invest their savings and extra funds in companies starting new projects or enterprises looking to expand their companies.
The companies raise money from the primary market through securities such as shares, debentures, loans and deposits, preference shares. Under the Securities and Exchange Board of India (SEBI) Guidelines, the securities can be offered for sale in the primary market through different ways.
When a company raises funds by selling (issuing) its shares (or debenture / bonds) to the public through issue of offer document (prospectus), it is called a public issue. When a (unlisted) company makes a public issue for the first time and gets its shares listed on stock exchange, the public issue is called as initial public offer (IPO). When a listed company makes another public issue to raise capital, it is called Follow-on Public offer (FPO).
At a time when a company decides to raise more capital from existing shareholders, it offers the shareholders more shares at a discounted rate than the prevailing market price. The number of shares offered is on pro-rata basis, and this process is known as a Rights Issue.
A private placement is another method of capital raising and it involves the sale of securities to a relatively small number of selected investors. Investors involved in private placements can include large banks, mutual funds, insurance companies and pension funds. A private placement is different from a public issue in which securities are made available for sale in the open market to any type of investor.
A foreign company can access Indian securities market for raising funds through issue of Indian Depository Receipts (IDRs). An IDR is an instrument denominated in Indian Rupees in the form of a depository receipt created by a Domestic Depository (custodian of securities registered with the Securities and Exchange Board of India) against the underlying equity of issuing company to enable foreign companies to raise funds from the Indian securities Markets.
Securities issued by a company for the first time are offered to the public in the primary market. Once the IPO is done and the stock is listed, they are traded in the secondary market. The main difference between the two is that in the primary market, an investor gets securities directly from the company through IPOs, while in the secondary market, he purchases securities from other investors willing to sell the same.
Equity shares, bonds, preference shares, treasury bills, debentures, etc. are some of the key products available in a secondary market. SEBI is the regulator of the same.
The money market enables economic units to manage their liquidity positions through lending and borrowing short-term loans, generally less than 1 year. It facilitates the interaction between individuals and institutions with temporary surpluses of funds and their counterparts who are experiencing a temporary shortage of funds.
A commodity market is a place where companies offset their futures risks by buying or selling natural resources. Commodity market is a physical or virtual marketplace for buying, selling and trading raw or primary products, and there are currently about 50 major commodity markets worldwide that facilitate investment trade in approximately 100 primary commodities.
Foreign exchange market props up the foreign exchange trading. It’s the largest, most liquid market in the world with an average traded value of more than $5 trillion per day. It includes all of the currencies in the world and any individual, company or country can participate in it.
Derivatives market facilitates the trading in financial instruments such as futures contracts and options used to help control financial risk. The instruments derive their value mostly from the value of an underlying asset that can come in many forms – stocks, bonds, commodities, currencies or mortgages.
1) According to the passage, which of the following methods is used by the foreign companies to raise the funds from Indian capital market?
a) Private placement
b) Sale through intermediaries
c) Preferential allotment
d) Indian Depository Receipts
e) Follow-on public offer
2) According to the passage, when a company issues its shares for the first time so as to raise the capital, which of the following type of markets does it consider ?
a) Derivatives market
b) Secondary capital market
c) Foreign exchange market
d) Primary capital market
e) Commodity market
3) In the passage, according to which of the following methods, does a company raise additional capital from its existing shareholders?
a) Follow on Public Offer
b) Private Placement
c) Right Issue
d) Initial Public Offer
e) Indian Depository Receipts
4) According to the passage, which of the following parts of financial market deals with the long term funds investment?
a) economic market
b) liquidity market
c) wealth market
d) money market
e) capital market
5) Which of the following statements is true in the context of the passage?
a) Commodity market is a physical or virtual marketplace just for selling the primary products.
b) Money market enables economic units to manage their liquidity positions.
c) Securities issued by a company for the first time are offered to the public in the secondary market.
d) None of the above
e) All are true
6) Find the incorrect statement on the basis of the given passage.
a) The main function of the primary market is capital formation.
b) There are currently about 50 major commodity markets worldwide.
c) Private placement is that method of capital raising in which securities are issued to the public.
d) Financial instruments like commercial bills, shares, bonds, treasury bills for short and long term are the traded in the financial market.
e) All are correct
7) Choose the word which as same meaning as the word “offset”
8) Choose the word which as same meaning as the word “discounted”
9) Choose the word which as opposite meaning as the word “deficit”
10) Choose the word which as opposite meaning as the word “prop up”
a) buoy up
1) Answer: d)
It is clearly mentioned in the passage that through Indian Depository Receipts (IDRs), foreign company can access Indian capital market for raising funds.
2) Answer: d)
It is clearly mentioned in the passage that when a company publicly sells new stocks and bonds for the first time, it does so in the primary capital market.
3) Answer: c)
It is mentioned in the passage that when a company decides to raise more capital from its existing shareholders, this process is known as Right Issue.
4) Answer: e)
It is given in the passage that capital market is that part of financial market in which long-term debt or equity-backed securities are bought and sold.
5) Answer: b)
According to the passage, true statement is “money market enables economic units to manage their liquidity positions. ”
6) Answer: c)
It is mentioned in the passage that private placement method of capital raising involves the sale of securities to a relatively small number of selected investors and this method is different from a public issue in which securities are made available for sale in the open market to any type of investor.
7) Answer: d)
The meaning of “offset” is “equalize /balance/ counteract/ neutralize”.
8) Answer: c)
The meaning of “discounted” is “low cost/ reduced/ docked”.
9) Answer: a)
The meaning of “deficit” is “discrepancy / dearth” and its opposite is “plethora/excess”.
10) Answer: c)
The meaning of “prop up” is “support /sustain” and its opposite is “daunt/ discourage”.
Daily Practice Test Schedule | Good Luck
|Topic||Daily Publishing Time|
|Daily News Papers & Editorials||8.00 AM|
|Current Affairs Quiz||9.00 AM|
|Current Affairs Quiz (Hindi)||9.30 AM|
|IBPS PO Prelims – Reasoning||10.00 AM|
|IBPS PO Prelims – Quantitative Aptitude||11.00 PM|
|Vocabulary (Based on The Hindu)||12.00 PM|
|IBPS PO Prelims – English Language||1.00 PM|
|IBPS PO/Clerk – GK||3.00 PM|
|Daily Current Affairs Updates||5.00 PM|
|IBPS Clerk Prelims – Reasoning||6.00 PM|
|IBPS Clerk Prelims – Reasoning (Hindi)||6.30 PM|
|IBPS Clerk Prelims – Quantitative Aptitude||7.00 PM|
|IBPS Clerk Prelims – Quantitative Aptitude (Hindi)||7.30 PM|
|IBPS Clerk Prelims – English Language||8.00 PM|