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Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?

(a)

Certificate of Deposit

(b)

Commercial Paper

(c)

Promissory Note

(d)

Participatory Note

Correct Answer

(d)

Explanation

P-Notes or Participatory Notes are Overseas Derivative Instruments that have Indian stocks as their underlying assets. They allow foreign investors to buy stocks listed on Indian exchanges without being registered.

Microtheme: Finance/Capital Market —
19 questions asked in Prelims in the past.

  1. [2026] Which of the following statements about Crowdfunding is/are correct?
    1. Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
    2. Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.

    • (a) 1 only
    • (b) 2 only
    • (c) Both 1 and 2
    • (d) Neither 1 nor 2
    Correct Answer: (C) Both 1 and 2
  2. [2025] Consider the following statements:
    I. India accounts for a very large portion of all equity option contracts traded globally, thus exhibiting a great boom.
    II. India’s stock market has grown rapidly in the recent past, even overtaking Hong Kong’s at some point in time.
    III. There is no regulatory body either to warn small investors about the risks of options trading or to act on unregistered financial advisors in this regard.
    Which of the statements given above are correct?

    • (a) I and II only
    • (b) II and III only
    • (c) I and III only
    • (d) I, II and III
    Correct Answer: (A) I and II only
  3. [2025] Consider the following statements:
    Statement I: As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.
    Statement II: Bondholders are lenders to a company whereas stockholders are its owners.
    Statement III: For repayment purpose, bondholders are prioritized over stockholders by a company.
    Which one of the following is correct in respect of the above statements?

    • (a) Both Statement II and Statement III are correct and both of them explain Statement I
    • (b) Both Statement I and Statement II are correct and Statement I explains Statement II
    • (c) Only one of the Statements II and III is correct and that explains Statement I
    • (d) Neither Statement II nor Statement III is correct
    Correct Answer: (A) Both Statement II and Statement III are correct and both of them explain Statement I
  4. [2024] With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of:

    • (a) Bond market
    • (b) Forex market
    • (c) Money market*
    • (d) Stock market
    Correct Answer: (C) Money market*
  5. [2023] In the context of finance, the term ‘beta’ refers to

    • (a) the process of simultaneous buying and selling of an asset from different platforms
    • (b) an investment strategy of a portfolio manager to balance risk versus reward
    • (c) a type of systemic risk that arises where perfect hedging is not possible
    • (d) a numeric value that measures the fluctuations of a stock to changes in the overall stock market
    Correct Answer: (D) a numeric value that measures the fluctuations of a stock to changes in the overall stock market
  6. [2023] Consider the following markets :
    1. Government Bond Market
    2. Call Money Market
    3. Treasury Bill Market
    4. Stock Market
    How many of the above are included in capital markets?

    • (a) Only one
    • (b) Only two
    • (c) Only three
    • (d) All four
    Correct Answer: (B) Only two
  7. [2022] Consider the following statements :
    1. In India, credit rating agencies are regulated by Reserve Bank of India.
    2. The rating agency popularly known as ICRA is a public limited company.
    3. Brickwork Ratings is an Indian credit rating agency.
    Which of the statements given above are correct ?

    • (a) 1 and 2 only
    • (b) 2 and 3 only
    • (c) 1 and 3 only
    • (d) 1, 2 and 3
    Correct Answer: (B) 2 and 3 only
  8. [2021] With reference to India, consider the following statements:
    1.Retail investors through a demat account can invest in ‘Treasury Bills’ and ‘Government of India Debt Bonds’ in the primary market.
    2.The ‘Negotiated Dealing System-Order Matching’ is a government securities trading platform of the Reserve Bank of India.
    3.The ‘Central Depository Services Ltd’ is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.
    Which of the statements given above is/are correct?

    • (a) 1 only
    • (b) 1 and 2
    • (c) 3 only
    • (d) 2 and 3
    Correct Answer: (B) 1 and 2
  9. [2020] With reference to the Indian economy, consider the following statements:
    1. ‘Commercial Paper’ is a short-term unsecured promissory note.
    2. ‘Certificate of Deposit’ is a long-term instrument issued by the Reserve Bank of India
    to a corporation.
    3. ‘Call Money’ is a short-term finance used for interbank transactions.
    4. ‘Zero-Coupon Bonds’ are the interest bearing short-term bonds issued by the
    Scheduled Commercial Banks to corporations.
    Which of the statements given above is/are correct?

    • (a) 1 and 2 only
    • (b) 4 only
    • (c) 1 and 3 only
    • (d) 3 and 4 only
    Correct Answer: (C) 1 and 3 only
  10. [2020] In the context of the Indian economy, non-financial debt includes which of the following?
    1. Housing loans owed by households.
    2. Amounts outstanding on credit cards
    3. Treasury bills
    Select the correct answer using the code given below:

    • (a) 1 only
    • (b) 1 and 2 only
    • (c) 3 only
    • (d) 1, 2 and 3
    Correct Answer: (D) 1, 2 and 3
  11. [2019] Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?

    • (a) Certificate of Deposit
    • (b) Commercial Paper
    • (c) Promissory Note
    • (d) Participatory Note
    Correct Answer: (D) Participatory Note
  12. [2014] What does venture capital mean?

    • (a) A short-term capital provided to industries.
    • (b) A long-term start-up capital provided to new entrepreneurs.
    • (c) Funds provided to industries at times of incurring losses.
    • (d) Funds provided for replacement and renovation of industries.
    Correct Answer: (B) A long-term start-up capital provided to new entrepreneurs.
  13. [2010] Consider the following statements:
    The functions of commercial banks in India include
    1. Purchase and sale of shares and securities on behalf of customers
    2. Acting as executors and trustees of wills.
    Which of the statements given above is/are correct?

    • (a) 1 only
    • (b) 2 only
    • (c) Both 1 and 2
    • (d) Neither 1 nor 2
    Correct Answer: (C) Both 1 and 2
  14. [2010] Which one of the following is not a feature of Ltd. Liability Partnership firm?

    • (a) Partners should be less than 20
    • (b) Partnership and management need not be separate
    • (c) Internal governance may be decided by mutual agreement among partners
    • (d) It is corporate body with perpetual succession
    Correct Answer: (A) Partners should be less than 20
  15. [2010] In India which of the following is regulated by the Forward Market Commission?

    • (a) Currency Futures Trading
    • (b) Commodity Futures Trading
    • (c) Equity Futures Trading
    • (d) Both commodities futures and Financial Futures Trading
    Correct Answer: (B) Commodity Futures Trading
  16. [2010] In the parlance of financial investments, the term ‘bear’ denotes

    • (a) An investor who feels that the price of a particular security is going to fall
    • (b) An investor who expects the price of particular shares to rise
    • (c) A shareholder or a bondholder who has an interest in a company, financial or otherwise
    • (d) Any lender, whether by making a loan or buying a bond
    Correct Answer: (A) An investor who feels that the price of a particular security is going to fall
  17. [2009] In the context of global economy, which one of the following pairs is not correctly matched ?

    • (a) JP Morgan Chase: Financial Services
    • (b) Roche Holding: AG Financial Services
    • (c) WL Ross & Co.: Private Equity Firm
    • (d) Warburg Pincus: Private Equity Firm
    Correct Answer: (B) Roche Holding: AG Financial Services
  18. [2009] In the context of Indian news in recent times; what is MCX-SX ?

    • (a) A kind of supercomputer
    • (b) Title of Moon Impact Probe
    • (c) Stock Exchange
    • (d) Nuclear-powered Submarine
    Correct Answer: (C) Stock Exchange
  19. [2008] What does S & P 500 relate to?

    • (a) Supercomputer
    • (b) A new technique in e-business
    • (c) A new technique in bridge building
    • (d) An index of stocks of large companies
    Correct Answer: (D) An index of stocks of large companies