Financial markets and instruments — UPSC Prelims PYQs
22 questions in this bank come from Financial markets and instruments, spanning UPSC Prelims papers from 2013 to 2026. Every question here carries all four options, the correct answer and a full explanation.
It has appeared in 9 of the last 16 papers, most heavily in 2024 with 4 questions. That is a steady presence rather than a guaranteed one.
The themes examined most often within it are Financial instruments categorization (6), Regulatory framework for financial markets in India (5), Understanding financial metrics and risks (5), India's stock market trends and growth (3) and Investment avenues for retail investors (2). Those counts are of questions in which the theme is examined, not merely mentioned.
Questions here are spread across Economy (19), General Studies (Uncategorized) (1), History (1) and Science & Technology (1). Between them they draw on 21 distinct themes, so this is a broader area than a single revision note can cover. That is 1.5% of the 1433 questions in the bank — useful for deciding how much revision time it deserves.
It has come up more often lately — roughly 2.8 questions a year across the last five papers, against 0.9 before that.
It was not examined in 7 of those papers. Each question below links to its full explanation and to related questions on the same theme from other years, so a weak area can be worked through in one pass rather than hunted for paper by paper.
UPSC Prelims 20263 questions
- Economy
Which of the following statements about insurance in aviation sector is/are correct? 1. 'Aviation Hull Insurance' covers the physical aircraft, including the body, engine, and on-board equipment. 2. Under the Montreal Convention, adopted in 1999 by over 130 countries, including India, airlines are strictly liable to pay compensation to the family/nominee of every deceased passenger without requiring the family to prove fault. Select the answer using the code given below:
- Economy
With reference to different Committees in India, consider the following details: Sl. No. 1 - Committee: R.N. Malhotra Committee; Objective: Comprehensive reforms of Insurance sector in India; Organization under which it was formed: Insurance Regulatory and Development Authority of India Sl. No. 2 - Committee: L.C. Gupta Committee; Objective: Preparing a roadmap for the introduction of derivatives trading in India; Organization under which it was formed: Securities and Exchange Board of India Sl. No. 3 - Committee: Urjit R. Patel Committee; Objective: Preparing a roadmap for reforming bank lending to the Housing sector; Organization under which it was formed: Reserve Bank of India Sl. No. 4 - Committee: Y.H. Malegam Committee; Objective: Preparing a roadmap for reforms in Microfinance sector in India; Organization under which it was formed: Reserve Bank of India In which of the above rows are all the details correctly matched?
- Economy
A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called:
UPSC Prelims 20253 questions
- Economy
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 of time. III. There is no regulatory body either to warn the 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?
- Economy
With reference to investments, consider the following: I. Bonds II. Hedge Funds III. Stocks IV. Venture Capital How many of the above are treated as Alternative Investment Funds?
- Economy
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?
UPSC Prelims 20244 questions
- Science & Technology
Consider the following: 1. Exchange-Traded Funds (ETF) 2. Motor vehicles 3. Currency swap Which of the above is/are considered financial instruments?
- General Studies (Uncategorized)
With reference to the Indian economy, "Collateral Borrowing and Lending Obligations" are the instruments of :
- Economy
Consider the following statements: 1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India. 2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs). 3. In India, Stock Exchanges can offer separate trading platforms for debts. Which of the statements given above is/are correct?
- Economy
In India, which of the following can trade in Corporate Bonds and Government Securities? 1. Insurance Companies 2. Pension Funds 3. Retail Investors Select the correct answer using the code given below:
UPSC Prelims 20232 questions
UPSC Prelims 20222 questions
- Economy
With reference to Convertible Bonds, consider the following statements: 1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest. 2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices. Which of the statements given above is/are correct?
- Economy
With reference to Indian economy, consider the following statements: 1. A share of the household financial savings goes towards government borrowings. 2. Dated securities issued at market related rates in auctions form a large component of internal debt. Which of the above statements is/are correct?
UPSC Prelims 20212 questions
- Economy
Consider the following statements: Other things remaining unchanged, market demand for a good might increase if 1. price of its substitute increases 2. price of its complement increases 3. the good is an inferior good and the income of the consumer increases 4. its price falls Which of the above statements are correct?
- Economy
With reference to India, consider the following statements: 1. Retail investors through 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. ‘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?
UPSC Prelims 20203 questions
- History
Which of the following phrases defines the nature of the ‘Hundi’ generally referred to in the sources of the post- Harsha period?
- Economy
What is the importance of the term “Interest Coverage Ratio” of a firm in India? 1. It helps in understanding the present risk of a firm that a bank is going to give a loan to. 2. It helps in evaluating the emerging risk of a firm that a bank is going to give a loan to. 3. The higher a borrowing firm’s level of Interest Coverage Ratio, the worse is its ability to service its debt. Select the correct answer using the code given below.
- Economy
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?