S1: SEBI regulates the capital markets in India. S2: SEBI was established by an executive order. Which statement(s) is/are correct? MCQ with Answer and Explanation

Question

S1: SEBI regulates the capital markets in India. S2: SEBI was established by an executive order. Which statement(s) is/are correct?

A. S2 only

B. S1 only

C. Neither S1 nor S2

D. Both S1 and S2

Answer: Option B

Solution (By JKSSB Mock Tests)

SEBI regulates the capital markets to protect investors and promote development. It was initially set up by an executive resolution in 1988, but it was given statutory powers by the SEBI Act, 1992. S1 is correct, S2 is incorrect as it is now a statutory body.

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Question #1

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The concept of 'Materiality' implies that:

A. All items must be disclosed irrespective of amount

B. All transactions are material

C. Only material items need to be disclosed as per accounting standards

D. Only large companies follow materiality

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Correct Answer: Option C

Explanation:
Materiality means that items of significant value or nature should be disclosed; trivial items may be ignored.

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Question #2

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The primary objective of Financial Management is:

A. Wealth maximization of shareholders

B. Minimizing taxes

C. Profit maximization

D. Maximizing market share

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Correct Answer: Option A

Explanation:
Wealth maximization is considered the superior objective as it accounts for long-term value creation, risk, and the time value of money.

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Question #3

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In the context of PFMS, the 'Public Accounts Committee' (PAC) examines:

A. The appropriation accounts and the audit reports of the CAG

B. The tax collection policies

C. The annual budget estimates

D. The monetary policy of the RBI

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Correct Answer: Option A

Explanation:
The Public Accounts Committee (PAC) of the Parliament examines the appropriation accounts (showing how grants were spent) and the audit reports submitted by the Comptroller and Auditor General (CAG).

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