Daily JAIIB Quiz 23 Oct 2026

Price discovery is the process through which buyers’ bids and sellers’ offers interact in trading to establish a market price. It is a key function of financial markets and reflects available information, demand, supply and expectations. Regulators establish market rules, but ordinarily do not fix the price of every traded security.

Treasury bills are short-term money-market instruments issued by the Government of India. They are generally issued at a discount and redeemed at face value; the difference represents the investor’s return. Unlike conventional coupon-bearing bonds, they normally do not pay periodic interest.

A repurchase agreement (repo) is structured as a sale of securities with an agreement to repurchase them later at an agreed price. Economically, it commonly functions as collateralised borrowing and lending. An outright sale does not include a linked obligation to repurchase.

A Certificate of Deposit is a negotiable money-market instrument issued by eligible banks and specified financial institutions under the applicable RBI framework. It differs from equity shares, government bonds and insurance policies. Eligibility, tenor and other conditions are governed by current directions.

When market yields rise, the fixed coupon on an existing bond becomes less attractive compared with newly issued securities. Its market price therefore generally falls so its yield becomes competitive. Bond prices and market yields generally move in opposite directions.

The RBI Retail Direct Scheme facilitates eligible individual investors’ direct access to the government securities market through an online platform, subject to scheme rules. It broadens access to government securities but does not guarantee returns or allow individuals to issue currency.

The primary market allows issuers to raise funds by issuing new securities. The secondary market enables investors to trade securities already issued, supporting liquidity and price discovery. In an ordinary secondary-market trade, proceeds go to the selling investor rather than the original issuer.

Applications Supported by Blocked Amount (ASBA) blocks the application money in the applicant’s bank account. The amount is debited to the extent required after allotment; otherwise, the block is released according to the applicable process. This avoids transferring the full application amount upfront.

A QIP is a capital-raising route through which an eligible listed company issues specified securities to qualified institutional buyers under SEBI rules. It is not a retail-only issue, a central-bank loan or an insurance product.

FEMA, 1999 is the principal Indian legal framework for foreign exchange management. Its objectives include facilitating external trade and payments and promoting the orderly development and maintenance of the foreign exchange market. Transactions must also comply with relevant RBI rules and directions.

LIBOR was widely used as a benchmark in financial contracts, but its use was discontinued or restricted across currencies and settings. Alternative Reference Rates provide replacement benchmarks for relevant products and currencies. Legacy contracts may require fallback provisions or amendments.

The Asian Clearing Union is a regional payment and clearing arrangement designed to facilitate settlement of eligible transactions among participating member countries. It is not a stock exchange, insurance scheme or currency-issuing authority.

Merchant bankers perform capital-market services within SEBI’s regulatory framework. Depending on their registration and engagement, they may manage public issues, conduct due diligence and coordinate issue intermediaries. They do not set monetary policy or provide statutory deposit insurance.

A derivative is a contract whose value depends on an underlying asset, interest rate, exchange rate, index, credit event or other reference. Derivatives can be used for hedging, speculation or arbitrage, but may involve leverage and significant risks.

Exchange-traded futures are standardised and traded on an exchange, usually with clearing, margin and settlement arrangements. OTC forwards are commonly negotiated bilaterally and can be customised, but may create counterparty and documentation risks.

A CDS transfers specified credit risk from the protection buyer to the protection seller. The buyer generally pays a premium, and the seller must make the contractual settlement if a defined credit event occurs. The contract terms and applicable regulations determine the precise obligations.

Factoring involves financing or purchasing receivables and may include collections, ledger administration and credit-risk services. Forfaiting commonly involves purchasing export receivables, often without recourse to the exporter. The exact allocation of risk depends on the agreement.

TReDS brings together an MSME supplier, its buyer and financiers who bid to finance accepted receivables. The platform facilitates digital financing under the applicable regulatory framework and aims to improve MSMEs’ access to working capital.

Seed and early-stage venture capital helps develop and validate a business idea, product or early business model. Later rounds may support expansion and scaling. Investors accept significant business risk in exchange for potential equity appreciation and an eventual exit.

Under a lease, the lessor generally retains legal ownership while the lessee obtains the right to use the asset. Under hire purchase, the hirer typically possesses the asset and pays instalments, with a contractual route to acquire ownership after meeting conditions. Exact legal and accounting treatment depends on the agreement and applicable rules.