Students who will be giving their CBSE class 12th Business Studies exam must go through the important questions & answers of chapter 10 (Financial Markets). Thes given questions are NCERT based as well as from other reference books. Prepare well with them for the CBSE board exam 2020.
Q1- Mention the functions of the Financial Market?
Ans- The function of the Financial Market is given in points below:
- Establishing the Price
- Transferring Savings and Alternatives for Investment
- Reduced Cost of Transaction
- Facilitates Liquidity
Q2- In which issue stock is offered to an existing stockholder.
Ans: The issue in which the stock is offered to an existing stockholder is the Right Issue.
Q3- Mention the objectives of SEBI?
Ans- The objectives of the Security Exchange Board of India (SEBI) are:
- Code of Conduct
Q4- Mention any four functions of ‘Secondary Market’.
Ans- The four functions of ‘Secondary Market’ are:
- Secondary Market guarantees fairness and safety in a transaction.
- It gives a platform for trading to present customers.
- It gives a constant estimate of the securities which also helps in building demand and supply
- Secondary Market gives a platform for channelizing the saving to the most profitable way.
Q5- Give any four functions of the Stock Exchange.
Ans- The functions of the Stock Exchange are:
- Price Determination
- Providing Liquidity and Marketability
- Facilitating Economic Growth
- Safe and Fair Market
Q6- Briefly mention in points the objectives of NSE (National Stock Exchange)
Ans- The objectives of the National Stock Exchange are :
- With the help of an electronic trading system, NSE provides a fair, efficient and transparent securities market
- NSE aims at setting up a single nationwide trading system which provides trading facility in all types of securities
- NSE enables shorter settlement cycles and books entry settlements
- National Stock Exchange also aims at increasing the liquidity of the securities
- It aims at meeting the international standards and benchmarks of a stock exchange
Q7- Discuss the recent Capital Market reforms in India
Ans- A capital market is divided into two parts i.e., Primary Market and Secondary Market. The primary market deals with the issue of new securities. While Secondary market deals in the purchase and sale of the existing securities.
After the 1991 reform, a three-tier system came into the Indian Stock Market. This three-tier system consisted of the National Stock Exchange, Regional Stock Exchanges, and Over the Counter Exchange of India (OTCEI).
Q8- What are the protective functions of the Securities and Exchange Board of India.
Answer: The protective functions of SEBI are:
- It examines violation of insider trading and rules, and disobey to the companies act.
- Gives information about the companies as per the client’s requirement.
- It provides guidelines regarding investments in securities.
- Defines code of conduct for business practices
Q9- What are various Money Market instruments
Ans- The various Money Market Instruments are:
- Call Money
- Treasury Bill
- Certificate of Deposit
- Commercial Paper
- Commercial Bill
Q10- “Money Market is essentially a market for short term funds.” Discuss
Ans- Money market instruments are an important source of finance for working capital requirements. They have a high degree of liquidity. Some of the common instruments that are traded in the money market are commercial paper, treasury bills, call money, certificate of deposit, etc.