JAIIB Paper 1 Module D Quiz 9

The price-earnings ratio equals market price per share divided by earnings per share. ₹150 ÷ ₹10 = 15 times.

A market order prioritises execution rather than a specified price. The actual execution price can differ from the last traded price, particularly in volatile or illiquid markets.

A buy limit order sets a maximum acceptable purchase price. It may remain unexecuted if sellers are not available at that price or lower.

A stop-loss order is intended to trigger an order when the specified price condition is met. Execution price is not guaranteed, especially in a fast-moving or illiquid market.

A market lot is the standard quantity specified for trading a security or contract when lot sizes apply. Requirements vary by product and exchange rules.

Clearing corporations use risk-management resources and default procedures to support settlement continuity. These mechanisms do not insure investors against ordinary market losses.

Corporate actions such as dividends, rights issues and bonus issues require processing for eligible holders using record-date and settlement rules. A dealer’s FX quote or repo operation is not an issuer corporate action.

Merchant bankers perform issue-management and capital-market advisory functions within the SEBI framework. Current registration categories, capital requirements and duties should be checked against the latest regulations and circulars.

Regulatory changes may have commencement dates, phased implementation and transitional rules. A correct answer must apply the provision effective for the date and entities in the question.

Disclosure rules aim to improve transparency and investor decision-making. They cannot eliminate default or market risk, so investors still need to assess the issuer and instrument.

Private placement is a regulated issuance route with limits and procedural requirements. Non-compliance may have legal consequences, and a private placement is not an unrestricted public offer.

Artificial trading or misleading activity can distort prices and investor decisions and may violate securities law. Market integrity rules prohibit specified fraudulent and manipulative practices.

Long-duration assets tend to be more sensitive to yield changes. An investor who may need cash soon can incur losses if forced to sell after yields rise, even if the issuer continues to pay as promised.

Reinvestment risk is the risk that cash flows will have to be reinvested at rates lower than anticipated. It can be significant for coupon-paying and callable securities.

Unexpected inflation erodes the real value of fixed nominal payments and may push yields higher, reducing bond prices. The impact depends on the bond’s terms, maturity and market expectations.

Forward points are the adjustment between the spot and forward exchange rates. They are influenced by the interest-rate differential between currencies and quotation conventions, alongside market factors.

Official regulatory documents establish the operative rule and its scope. The date, effective date, transitional provisions and affected entities are essential to avoid applying an outdated or inapplicable requirement.

The entitlement is one new share for every five existing shares. Therefore, 200 ÷ 5 = 40 rights shares, subject to the issue terms and rounding rules.

Dividend yield is annual dividend per share divided by the current market price: ₹8 ÷ ₹200 × 100 = 4%. It does not include capital gains or losses.

EPS is earnings attributable to ordinary shareholders divided by the weighted average number of ordinary shares. ₹10 crore ÷ 2 crore shares = ₹5 per share.