JAIIB Paper 1 Module D Quiz 7

A fresh issue results in the company receiving subscription proceeds, subject to costs and terms. In secondary trading, sale proceeds ordinarily go to the selling investor.

A stock split increases the number of shares and reduces face value per share proportionately. It does not by itself change the investor’s proportional ownership or total economic value, ignoring market movements and other factors.

In a buyback, a company purchases its own shares according to applicable company and securities laws. It can affect share count and capital structure, but the legal route and conditions matter.

A green shoe option can support post-listing price stabilisation through permitted over-allotment arrangements. It operates under specified limits and procedures and does not guarantee a stable or rising price.

Anchor investors are eligible institutional investors participating in a specified portion of an issue before the broader book-building process, subject to SEBI conditions. Their participation does not guarantee issue performance.

Face value is the nominal value assigned to a share and used for certain corporate and accounting purposes. It is distinct from market price, which changes with demand, supply and information.

Market capitalisation equals the market price per share multiplied by the number of shares outstanding: ₹50 × 10 million = ₹500 million, or ₹50 crore.

Dematerialisation enables electronic holding and transfer, reducing risks such as loss, theft and forged physical certificates. Market, credit and operational risks can still exist.

A record date identifies holders eligible for a dividend, rights entitlement or other corporate action under the applicable rules and settlement timetable. Investors must consider the relevant ex-date and settlement conventions.

Listing and disclosure requirements aim to improve transparency and market integrity by requiring timely disclosures and specified governance practices. They do not guarantee financial success or protect investors from all losses.

When the INR-per-USD quotation rises, more rupees are required to buy one dollar. This means the rupee has weakened against the dollar, all else equal.

A cross rate derives the exchange rate between two currencies using their respective rates against a common currency. The calculation must keep quotation conventions consistent.

A currency mismatch occurs when cash inflows and obligations are denominated in different currencies. Exchange-rate movements can change the local-currency value of the net exposure.

Selling dollars forward can lock in the rupee value of expected dollar receipts. This reduces uncertainty but also limits the benefit if the dollar strengthens, and it creates a contractual obligation.

SOFR, the Secured Overnight Financing Rate, is an alternative reference rate used for many US-dollar contracts after the LIBOR transition. Contract-specific fallback language and applicable conventions remain important.

SONIA is the Sterling Overnight Index Average and is used as a benchmark in sterling markets. It is an overnight risk-free reference rate, subject to the relevant market conventions.

Depository receipts represent interests in underlying shares held under a depositary arrangement. They provide a mechanism for investors to access shares in markets outside the issuer’s home market.

An importer with a foreign-currency payable needs that currency to settle the invoice. If it appreciates, the importer’s domestic-currency cost rises unless hedged or offset by other exposures.

A rising DXY indicates dollar strength relative to the basket and methodology used in the index. It does not prove the dollar strengthened against every individual currency.

The current account includes trade in goods and services, primary income and secondary income. Cross-border purchases of financial assets are generally recorded in the financial account under the relevant statistical framework.