Zerodha Varsity Stock Market Basics Beginner Answers

Q1. How does investing help?

  1. Creates a large corpus at the time of retirement
  2. Beats inflation
  3. Helps you sustain a desired lifestyle post retirement
  4. All of the above

Q2. Investment in a bank’s fixed deposit is best suited when-

  1. You intend to earn a large return over a 1 year time period
  2. Safety of capital is the prime objective
  3. When you want to risk your capital and earn a higher return
  4. The expectation is to earn a fioxed 25% return per annum

Q3. Which best describes the characteristic of equity investment?

  1. High risk, high return
  2. Best suited for long term investment
  3. Volatile in nature
  4. All of the above

Q4. Which combination of asset allocation would you recommend a 27 year old working professional?

  1. 70% in fixed income, 15% in equity, and 15% in gold
  2. 50% in fixed income, 25% in equity 2 and 25% in gold
  3. 70% in equity, 15% in fixed income, and 15% in gold
  4. 450% in equity. 15% in fixed income and 25% in gold

Q5. A DEMAT account is used to-

  1. Maintain cash allocated to buy shares
  2. Store shares in electronic format
  3. Trade in ‘Futures and Options
  4. None of the above

Q6. A depository participant is a-

  1. Member of the stock exchange
  2. Member of the commodities exchange
  3. Member of NSDL
  4. Member of either NSDL/ CDSL or both

Q7. Which entity is responsible to guarantee settlements in the market?

  1. Clearing corporations
  2. The stock broker
  3. Banks
  4. There are no guarantees in market

Q8. The main reason for a company to file for an IPO is-

  1. Fund CAPEX requirements
  2. Provide an exit for early investors in the company
  3. Repay debt
  4. Can be any of the above

Q9. CAPEX Is best described as-

  1. Funds required for marketing and advertisements
  2. Funds required to repay old debt
  3. Funds required for operational expansion
  4. Funds required to run the day to day operations of the company

Q10. The Merchant Banker helps the company filing for an IPO in which of the following way-

  1. Find the subscribers for the IPO
  2. Conduct the due diligence and prepare the DHRP
  3. Promote the IPO and underwrite the issue
  4. Only b &c

Q11. A DRHP mainly contains information on-

  1. Financials of the company and details of the IPO
  2. Background of the promoters
  3. Risks involved in running the business
  4. All of the above

Q12. Oversubscription with respect to an IPO issue is

  1. When the number of shares bid for is higher than what is available on offer
  2. When the number of shares bid for is lower than what is available on offer
  3. When the number of shares bid for is equals what is available on offer
  4. None of the above

Q13. Green shoe option gives the company

  1. To withdraw the IPO at any point
  2. An option to stabilize the market price by buying up to 15% of the shares from the market, post listing
  3. Vary the number of shares on offer dynamically
  4. Vary the price band of the offer

Q14. The price band in the context of an IPO is

  1. The price range within which the share will be issued
  2. The price range within which the 2 subscribers have to bid for shares
  3. The indicative price range within which the share will trade at the close of the listing day
  4. Both a&b

Q15. An IPO also helps uplift the company’s public profile and aids in its growth

  1. True
  2. False

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