{"id":8511,"date":"2019-11-25T14:18:22","date_gmt":"2019-11-25T08:48:22","guid":{"rendered":"https:\/\/kseebsolutions.guru\/?p=8511"},"modified":"2021-07-02T15:45:01","modified_gmt":"2021-07-02T10:15:01","slug":"2nd-puc-business-studies-question-bank-chapter-10","status":"publish","type":"post","link":"https:\/\/kseebsolutions.guru\/2nd-puc-business-studies-question-bank-chapter-10\/","title":{"rendered":"2nd PUC Business Studies Question Bank Chapter 10 Financial Markets"},"content":{"rendered":"

You can Download Chapter 10 Financial Markets Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers<\/a> Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.<\/p>\n

Karnataka 2nd PUC Business Studies Question Bank Chapter 10 Financial Markets<\/h2>\n

2nd PUC Business Studies Financial Markets Text Book Exercises<\/h3>\n

2nd PUC Business Studies Financial Markets Multiple Choice Questions With Answers<\/strong><\/p>\n

Question 1.
\nPrimary and secondary markets :
\n(a) compete with each other
\n(b) complement each other
\n(c) function independently
\n(d) control each other
\nAnswer:
\n(b) Primary Market and Secondary Market complement each other as primary market deals with the issue of new securities and secondary market also helps the fresh Investor to enter the market.<\/p>\n

Question 2.
\nThe total number of Stock Exchanges in India is :
\n(a) 20
\n(b) 21
\n(c) 22
\n(d) 23
\nAnswer:
\n(d) There are 23 stock exchanges in India list of stock exchanges in India are Bombay, National, Regional, Ahmedabad, Bengaluru, Bhubaneshwar, Calcutta, Cochin, Coimbatore, Delhi, Guwahati, Hyderabad, Jaipur, Ludhiana, Madhya Pradesh, Madras (Chennai), Magadh, Mangalore, Meerut, OTC Exchange of India, Pune, Saurashtra Kutch, Vadodara.<\/p>\n

Question 3.
\nThe settlement cycle in NSE is
\n(a) T+5
\n(b) T+3
\n(c) T+2
\n(d) T+1
\nAnswer:
\n(c) The settlement cycle in NSE is T + 2.<\/p>\n

Question 4.
\nThe National Stock Exchange of India was recognised as stock exchange in the year
\n(a) 1992
\n(b) 1993
\n(c) 1994
\n(d) 1995
\nAnswer:
\n(b) NSE was incorporated in 1992 and was recognised as a stock exchange in April 1993.<\/p>\n

Question 5.
\nNSE commenced futures trading in the year
\n(a) 1999
\n(b) 2000
\n(c) 2001
\n(d) 2002
\nAnswer:
\n(b) In 2000 NSE commenced future tradings.<\/p>\n

\"KSEEB<\/p>\n

Question 6.
\nClearing and settlement operations of NSE is carried out by
\n(a) NSDL
\n(b) NSCCL
\n(c) SBI
\n(d) CDSL
\nAnswer:
\n(b) NSCCL carries out the clearing and settlement operations of NSE.<\/p>\n

Question 7.
\nOTCEI started on the lines of
\n(a) NASDAQ
\n(b) NYSE
\n(c) NASAQ
\n(d) NSE
\nAnswer:
\n(a) OTCEI (Over The Counter Exchange of India) was established on the lines of NASDAQ. (National Association of Securities Dealers Automated Quotations).<\/p>\n

Question 8.
\nTo be listed on OTCEI, the minimum capital requirement for a company is :
\n(a) \u20b9 5 crores
\n(b) \u20b9 3 crores
\n(c) \u20b9 6 crores
\n(d) \u20b9 1 crore
\nAnswer:
\n(b) In order to have its securities listed, the companies should have a minimum capital of \u20b9 3 crores.<\/p>\n

Question 9.
\nA Treasury bill is basically:
\n(a) an instrument to borrow short term funds
\n(b) an instrument to borrow long term funds
\n(c) an instrument of capital market
\n(d) None of the above
\nAnswer:
\n(a) Treasury Bills are instruments to borrow short term funds. These are issued by RBI on behalf of the Government of India.<\/p>\n

Question 10.
\nREPO is
\n(a) Repurchase agreement
\n(b) Read of the process
\n(c) Reliance petroleum
\n(d) None of the above
\nAnswer:
\n(a) Repurchase agreement<\/p>\n

2nd PUC Business Studies Financial Markets Short Answer Questions With Answers<\/strong><\/p>\n

Question 1.
\nWhat are the functions of a Financial Market?
\nAnswer:
\nFinancial market plays an important role in the allocation of scarce resources in an economy by performing the follow ing four important functions
\na. Mobilisation of savings and channelising them into the most productive uses: A financial market facilitates the transfer of savings from savers to investors. It gives choice to the saver of different investments and thus, it helps to channelise surplus funds into the most productive use.<\/p>\n

b. Facilitate price discovery: In a financial market, the households are suppliers of funds and business firms represent the demand. The interaction between them helps to establish a price for the financial asset which is being traded in that particular market.<\/p>\n

c. Provides Liquidity to financial assets: Financial markets facilitate easy purchase and sale of financial assets. Holders of assets can readily sell their financial assets through the mechanism of financial market.<\/p>\n

d. Reduces the cost of transactions: Financial markets provide valuable information about securities being traded in the market. It helps to save time, effort and money that both buyers and sellers of a financial asset would have to spend to try or otherwise find each other.<\/p>\n

Question 2.
\n“Money Market is essentially a Market for short term funds:’ Discuss.
\nAnswer:
\nThe money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year These assets are close substitutes for’money. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. It enables the raising of short term funds for earning returns.<\/p>\n

The major participants in the market are the Reserve Bank of India, Commercial Bank. Non\u00acBanking Finance Companies, State Governments, Large Corporate Houses and Mutual Funds.<\/p>\n

\"KSEEB<\/p>\n

Question 3.
\nWhat is a Treasury Bill?
\nAnswer:
\nA Treasury Bill is an instrument of short term borrowing by the Government of India, Maturing in less than one year. They are also known as Zero Coupon Bonds issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. Treasury Bills are issued in the form of a promissory note.<\/p>\n

They are highly liquid and have assured yield and negligible risk of default. They are issued at a price which is lower than their face value and repaid at par. Treasury bills are available for a minimum amount of \u20b9 25,000.<\/p>\n

Question 4.
\nDistinction between Money Market & Capital Market?
\nAnswer:<\/p>\n\n\n\n\n\n\n\n\n
SL. No.<\/strong><\/td>\nMoney market<\/strong><\/td>\nCapital market<\/strong><\/td>\n<\/tr>\n
a.<\/td>\nIt deals in short term funds.<\/td>\nIt deals in a long term funds.<\/td>\n<\/tr>\n
b.<\/td>\nThe maturity period is from one day to one year.<\/td>\nThe maturity period is for more than one year and can also include life time of a company.<\/td>\n<\/tr>\n
c.<\/td>\nIt provides funds for working capital requirement.<\/td>\nIt provides funds for fixed capital requirement.<\/td>\n<\/tr>\n
d.<\/td>\nRate of returns is low<\/td>\nRate of returns is high.<\/td>\n<\/tr>\n
e.<\/td>\nFinancial risk is relatively less.<\/td>\nFinancial risk is relatively more.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Question 5.
\nWhat are the functions of a Stock Exchange?
\nAnswer:
\nThe efficient functioning of a stock exchange creates a conducive climate for an active and growing primary market. Following are the important functions of a stock exchange.
\na. Providing liquidity and marketability to existing securities: The basic function of a Stock Exchange is the creation of a continuous market where securities are bought and sold. It gives investors the chance to disinvest and reinvest. Thus it provides both liquidity and easy marketability to the existing securities in the market.<\/p>\n

b. Pricing of securities: Share prices on a stock exchange are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through which the prices of securities are determined. Such a valuation provides important instant information to both buyers and sellers in the market.<\/p>\n

c. Safety of transactions: The membership of a stock exchange is well-regulated and its dealings are well defined according to the existing legal framework, which ensures that the investing public gets a safe and fair deal on the market.<\/p>\n

d. Contributes to economic growth: A stock exchange is a market in which existing securities are resold or traded. This process of disinvestment and reinvestment of savings gets channelised into productive investment avenues. This leads to capital formation and economic growth.<\/p>\n

e. Spreading of Equity Cult: The stock exchange plays vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.<\/p>\n

6. Providing scope for speculation: The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled manner.<\/p>\n

Question 6.
\nWhat are the objectives of the SEBI?
\nAnswer:
\nThe overall objective of SEBI is to protect the interest of investors, promote the development and regulate the securities in market. This may be elaborated as follows.
\na. To regulate stock exchanges and the securities industry, to promote their orderly functioning.
\nb. To protect the rights and interests of investors, particularly individual investors and to guide and educate them.
\nc. To prevent trading malpractices and achieve a balance between self-regulation by the securities and its statutory regulation.
\nd. To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers etc with a view to making them competitive and professional.<\/p>\n

Question 7.
\nState the objectives of the NSE.
\nAnswer:
\nNSE was set up with the following objectives.
\na. Establishing a nationwide trading facility for all types of securities.
\nb. Through an appropriate communication network, ensuring equal access to investors.
\nc. Through electronic trading system to provide a fair, efficient and transparent security market.
\nd. To enable shorter settlement cycles and book entry settlements.
\ne. Meeting international benchmarks and standards.<\/p>\n

Question 8.
\nWhat is the OTCEI?
\nAnswer:
\nThe OTCEI is a company incorporated under the Companies Act, 1956. It was set up to provide smaii and medium companies an access to the capital market for raising finance in a cost effective manner. It is fully computerised, transparent, single window Exchange which commenced trading in 1992. This exchange is established on the lines of NASOAO the OTC exchange in USA. It has been promoted by UTI, ICICI, IOBI, IFCI, LIC, GIC, SBI, capital markets and Canbank financial services.<\/p>\n

It is a negotiated market place that exists anywhere as opposed to the auction market place, represented by the activity on securities exchange. Thus, in the OTC, exchange, trading takes place when a buyer or seller walks up to an OTCEI counter, taps on the computer screen, finds quotes and effects a purchase or sale depending on whether the prices meet their target.<\/p>\n

\"KSEEB<\/p>\n

2nd PUC Business Studies Financial Markets Long Answer Questions With Answers<\/strong><\/p>\n

Question 1.
\nExplain the various money Market Instruments.
\nAnswer:
\nMoney Market Instruments :
\n1. Treasury7 Bill: A treasury7 bill is an instrument of short term borrowing by the Government of India maturing in less than one year. They are also known as Zero Coupon Bonds issued by Reserve Bank of India on behalf of the Central Government to meet its short term requirements of funds. They are issued in the form of a promissory note. They are highly liquid and issued at a price which is lower than their face value and repaid at par. Treasury bills are available for a minimum amount of \u20b9 25,000.<\/p>\n

2. Commercial Paper: Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short term funds at lower rates of interest than market rates. It usually has a maturity period of 15 days to one year. The issuance of commercial paper is an alternative to bank borrowing for large companies that are generally considered to be financially strong. It is sold at a discount and redeemed at par.<\/p>\n

3. Call Money: Call money is a short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions. Commercial Banks have to maintain a minimum cash balance known as cash reserve ratio. Call money is a method by which banks borrow from each other.<\/p>\n

4. Certificate of Deposit: Certificates of deposit are unsecured, negotiable, short term instruments in bearer form, issued by Commercial Banks and Development Financial Institutions. They can be issued to individuals, Corporations and Companies during periods of tight liquidity, when the deposit growth of banks is slow but the demand for credit is high. They help to mobilise a large amount of money for short periods.<\/p>\n

5. A Commercial Bill: A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. It is a short term negotiable, self- liquidating instrument which is used to finance the credit sales of firms. When goods are sold on credit, the buyer becomes liable to make payment on a specific date in the future.<\/p>\n

Question 2.
\nWhat are the methods of floatation in Primary Market?
\nAnswer:
\nThe primary market is also known as the new’ issues market. It deals with new securities being issued for the first time. There are various methods of floating new issues in the primary’ market
\n1. Offer through Prospectus: This involves inviting subscriptions from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, throuqh an advertisement in newspapers and magazines. The issues may be under written and also required to be listed on at least one stock exchange. The contents at the prospectus have to be in accordance with the provisions of the Companies Act and SEBI disclosure and investor protection guidelines.<\/p>\n

2. Offer for Sale: Under this method securities are not issued directly to the public but offered for sale through intermediaries like issuing houses or stock brokers. In this case, company sells securities enblock at an agreed price to brokers who, in turn, resell them to the investing public.<\/p>\n

3. Private placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. Access to the primary market can be expensive on account of various mandatory’ and non-mandatory expenses.<\/p>\n

4. Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the \u2019right\u2019 to buy new shares in proportion to the number of shares they already possess.<\/p>\n

5. e-IPOs: A company proposing to issue capital to the public through the on-line system of the Stock Exchange has to enter into an agreement with the stock exchange. This is called an Initial Public Offer (IPO). SEBI registered brokers have to be appointed for the purpose of accepting applications and placing orders with the company. The issuer company should appoint a registrar to the issue having electronic connectivity with the exchange. The issuer company can apply for listing of its securities on any Exchange other than the Exchange through which it has offered its securities. The lead manager co-ordinates all the activities amongst intermediaries connected with the issue.<\/p>\n

Question 3.
\nExplain the Capital Market reforms in India.
\nAnswer:
\nThe National Stock Exchange is the latest, most modern and technology driven exchange. NSE has setup a nationwide fully automated screen based trading system. The NSE was setup by leading financial institutions, banks, insurance companies and others financial intermediaries. It is managed by professionals, who do not directly or indirectly trade on the exchange. The trading rights are with the trading members who offer their services to the investors. The Board of NSE comprises senior executives from promoter institutions and eminent professionals, without having any representation from trading members.
\nObjectives of NSE:
\na. Establishing a nationwide trading facility for all types of securities.
\nb. Ensuring equal access to investors all over the country through an appropriate communication network.
\nc. Providing a fair, efficient and transparent securities market using electronic trading sys-tern.
\nd. Enabling shorter settlement cycles and book entry settlements, (v) Meeting international bench marks and standards.
\nWithin a span of 10 year, NST Was able to achieve its objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian capital market.<\/p>\n

Question 4.
\nExplain the objectives and functions of SEBI. .
\nAnswer:
\nObjectives of SEBI are as follows:
\na. Development of securities market: The main objective of SEBI is to develop the securities market. It strictly prohibits the malpractices of brokers, merchants and companies involved in securities market and encourage transparent transaction dealing in the stock exchanges.<\/p>\n

b. Protection of interest of investment: SEBI aims at protecting the rights and interests of investors through accurate and authentic information to the investors. SEBI can prosecute the companies if they fail to follow the rules and regulations laid down by SEBI.<\/p>\n

\"KSEEB<\/p>\n

c. Regulation of capital market: SEBI regulates both the primary and secondary capital markets. Every company issuing the shares to the public has to take the clearance from SEBI and follow the rules regarding the issue, settlement and speculation etc.<\/p>\n

Functions of SEBI are:<\/p>\n

    \n
  • Regulating the business in Stock Exchanges and any other securities market<\/li>\n
  • Registering and regulating the working of mutual funds<\/li>\n
  • Promoting and regulation of self-regulatory organizations<\/li>\n
  • Prohibiting insider trading in securities.<\/li>\n
  • Regulating substantial acquisition of shares and take-over of companies. –<\/li>\n
  • Conducting enquiries and audit of stock exchanges.<\/li>\n
  • Levying fees and other charges for carrying out its functions.<\/li>\n
  • Conducting research for the above purposes.<\/li>\n
  • Promoting investors’ education and training of intermediaries of securities market.<\/li>\n
  • Registering and regulating the working of capital market intermediaries.<\/li>\n<\/ul>\n

    Question 5.
    \nExplain the various segments of NSE.
    \nAnswer:
    \nNSE provides trading in the following two segments
    \na. Wholesale debt market segment: This segment provides a trading platform for a wide range of fixed income securities that include Central Government Securities, Treasury Bills, State Development Loans, Bonds issued by Public Sector Undertakings, floating rate Bonds, zero coupon Bonds, index Bonds, Commercial Paper, Certificate of Deposit, Corporate Debentures and Mutual Funds.<\/p>\n

    b. Capital Market Segment: The capital market segment of NSE provides efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.<\/p>\n

    2nd PUC Business Studies Financial Markets Case Problems<\/strong><\/p>\n

    ‘R’ Limited is a real estate company which was formed in 1950. In about 56 years of its existence the company has managed to carve out a niche for itself in this sector. Lately, this sector is witnessing a boom due to the fact, that the Indian economy is on the rise. The incomes of middle class are rising. More people can afford to buy homes for themselves due to easy availability of loans and accompanying tax concessions.<\/p>\n

    To expand its business in India and abroad the company is weighing various’options to raise money through equity offerings in India. Whether to tap equity or debt, market whether to raise money from domestic market or international market or combination of both? Whether to raise the necessary finance from money market or capital market. It is also planning to list itself in New York Stock Exchange to raise money through ADR’s. To make its offerings attractive it is planning to offer host of financial plans products to its stakeholders and investors and also expand it’s listing at NSE after complying with the regulations of SEBI.<\/p>\n

    Questionn 1.
    \nWhat benefits will the company derive from listing at NSE?
    \nAnswer:
    \nFollowing are the benefits the company can derive from listing at NSE
    \na. NSE provides nationwide trading facility for all types of securities.
    \nb. The liquidity and best available prices for the securities are ensured by the processing speed of the Exchange.
    \nc. The NSE network is used to disseminate information and company announcements across the country.
    \nd. Enabling shorter settlement cycles and book entry settlement.<\/p>\n

    Question 2.
    \nWhat are the regulations of SEBI that the company must comply with?
    \nAnswer:
    \nFollowing are the regulations of the SEBI for new issues that the company must comply with.
    \na. Prospectus has to be attached with every application.
    \nb. Objective of the issue and cost of project should be mentioned in the prospectus.
    \nc. Company’s management, past history and present business of the firm should be highlighted in the prospectus.
    \nd. Subscription list for public issue should be kept open for a minimum of 3 days and maximum of 10 days.
    \ne. Collection agents are not allowed to collect application money in cash.
    \nf. Issue should make adequate disclosure regarding the terms and conditions of redemption security conversion and other relevant features of the new Instrument so that an investor can make reasonable determination of risks returns, safety and liquidity of the instrument. The disclore shall be vetted by SEBI in this regard<\/p>\n

    \"KSEEB<\/p>\n

    Question 3.
    \nHow does the SEBI exercise control over ‘R’ Limited in the interest of investors?
    \nAnswer:
    \nSEBI will exercise control over ‘R’ Limited by the following methods.
    \na. Prohibiting fraudulent and unfair trade practices In the securities market, unfair trade practices include price rigging, making misleading statements etc.<\/p>\n

    b. Prohibiting insider trading i.e., restricts the persons having access to price sensitive information about the company to take undue advantage of it.<\/p>\n

    c. Examing that adequate disclosure about the terms and conditions of redemption, security conversion and other relevant features of the new Instrument at the time of issue is made so that an investor can make reasonable determination of risks returns, safety and liquidity of the instrument.<\/p>\n

    Case Problem II
    \n\"2nd
    \n\"2nd
    \nThe above figures are taken from the website of National Stock Exchange of India. They illustrate the movement of NSE stock indices as well as world stock indices on the date indicated.<\/p>\n

    Question 4.
    \nWhat do you mean by a stock index? How is it calculated?
    \nAnswer:
    \nStock index refers to the index used to capture the movement of the stock market. It is a barometer which measures overall market trend through a set of stocks which are representatives of the market An ideal index must represent changes in the prices of securities and also show the price movement of different classes of shares. Most of the stock market uses the following 3 methods of calculating index.
    \na. Price weighted Index: An index reflecting the sum of the prices of the sample share in a certain year\/month\/week\/day with reference to a base year.<\/p>\n

    b. Equal Weighted Index : An index reflecting the simple arithmetic average of thfe price relatives of a sample of shares in a certain period with reference to a base year,<\/p>\n

    c. Value Weighted Index: It is an index reflecting the aggregate market capitalisation of the sample shares in certain period in relation to the base year.<\/p>\n

    Question 5.
    \nWhat conclusions can you draw from the various movements of NSE stock indices?
    \nAnswer:
    \nThere is a downward swing in the stock market. While comparing the previous and current index of NSE, we can say that there is a depression in the market as index is down for all the sectors.<\/p>\n

    \"KSEEB<\/p>\n

    Question 6.
    \nWhat factors affect the movement of stock indices? Elaborate on the nature of these factors.
    \nAnswer:
    \nThe fall in the domestic market as given in the above table, can significantly be attributed to the market sentiments of world market. We can see the world indices and NSE indices are moving in the same direction.<\/p>\n

    Question 7.
    \nWhat relationship do you see between the movement of indices in world markets and NSE indices?
    \nAnswer:
    \nThere is direct relation between NSE indices and world market indices. As there is negative trend in world index, it brings negative trend in NSE index also.<\/p>\n

    Question 8.
    \nGive details of all the indices mentioned above, you can find information on the web or business magazines.
    \nAnswer:
    \nAnswer to this question is based on reader’s evaluation.<\/p>\n

    2nd PUC Business Studies Financial Markets Additional Questions<\/h3>\n

    2nd PUC Business Studies Financial Markets One Mark Questions and Answers\u00a0<\/strong><\/p>\n

    Question 1.
    \nName any one type of financial market.
    \nAnswer:
    \nMoney Market or Capital Market.<\/p>\n

    Question 2.
    \nGive the meaning of financial market.
    \nAnswer:
    \nIt is a market which deals with various financial instruments & financial services<\/p>\n

    Question 3.
    \nState the minimum & maximum period of maturity in the case of money market instruments.
    \nAnswer:
    \nMinimum maturity period is one year and Maximum maturity period is more than one year.<\/p>\n

    Question 4.
    \nName any one money market instrument.
    \nAnswer:
    \nTreasury bills or Call money<\/p>\n

    Question 5.
    \nName the most important constituent of Indian money market.
    \nAnswer:
    \nReserve Bank of India.<\/p>\n

    Question 6.
    \nName the money market instrument issued by government of India.
    \nAnswer:
    \nTreasury bills.<\/p>\n

    Question 7.
    \nName any one capital market instrument.
    \nAnswer:
    \nDebt market or Equity market<\/p>\n

    Question 8.
    \nState any one component of capital market.
    \nAnswer:
    \nPrimary Capital Market or Secondary Capital Market<\/p>\n

    Question 9.
    \nWhat is DEMAT account?
    \nAnswer:
    \nIt is an account in which all securities are held electronically by cancelling paper certificates through a process called dematerialization.<\/p>\n

    Question 10.
    \nWhat is dematerialization of securities?
    \nAnswer:
    \nDematerialization is the process of converting the certificates held by the investor in physical form to an electronic form through DEMAT Account.<\/p>\n

    Question 11.
    \nWhat is the biggest advantage of online trading on a stock exchange?
    \nAnswer:
    \nThey charge considerably lower brokerage for stock trading<\/p>\n

    Question 12.
    \nExpand SEBI
    \nAnswer:
    \nSECURITIES AND EXCHANGE BOARD OF INDIA<\/p>\n

    \"KSEEB<\/p>\n

    Question 13.
    \nState any one objective of SEBI
    \nAnswer:
    \nDevelopment of securities market<\/p>\n

    Question 14.
    \nExpand NSEI .
    \nAnswer:
    \nNational Stock Exchange India<\/p>\n

    Question 15.
    \nExpand NASDAQ
    \nAnswer:
    \nNational Association of Securities Dealers Automate Quotation<\/p>\n

    Question 16.
    \nExpand BSE
    \nAnswer:
    \nBombay Stock Exchange.<\/p>\n

    Question 17.
    \nExpand SENSEX
    \nAnswer:
    \nIt is an abbreviation of Bombay Exchange SENSitive IndEX (SENSEX)<\/p>\n

    Question 18.
    \nName any one type of speculator in a stock exchange.
    \nAnswer:
    \nBull or Stag<\/p>\n

    Question 19.
    \nWhich market provides short term finance?
    \nAnswer:
    \nMoney Market<\/p>\n

    Question 20.
    \nWhat is capital market?
    \nAnswer:
    \nCapital market is a market for medium & long terms funds.<\/p>\n

    Question 21.
    \nState any one function of stock exchange.
    \nAnswer:
    \nMobilization of savings<\/p>\n

    Question 22.
    \nState any one depository services.
    \nAnswer:
    \nIt keeps custody of investments holding.<\/p>\n

    Question 23.
    \nState any one function of SEBI.
    \nAnswer:
    \nRegistering & regulating the working of mutual funds.<\/p>\n

    2nd PUC Business Studies Financial Markets Two Marks Questions and Answers<\/strong><\/p>\n

    Question 1.
    \nWhat is money market?
    \nAnswer:
    \nIt is a market for borrowing & lending of short-term funds with high liquidity.<\/p>\n

    Question 2.
    \nWhat is capital market?
    \nAnswer:
    \nCapital market is a market for medium & long terms funds. Whereby long & intermediate term funds are & made available to individuals, business & government.<\/p>\n

    Question 3.
    \nWrite any two money market instruments.
    \nAnswer:
    \nTreasury bills. & Certificate of deposits.<\/p>\n

    Question 4.
    \nWhat are treasury bills?
    \nAnswer:
    \nA treasury bills an instrument of short term borrowing by the Government of India maturing in less than one year.<\/p>\n

    Question 5.
    \nWhat are commercial papers?
    \nAnswer:
    \nCommercial paper is a short term unsecured promissory note, negotiable & transferable by endorsement & delivery with a fixed maturity period issued by the companies.<\/p>\n

    Question 6.
    \nWhat are the certificates of deposits?
    \nAnswer:
    \nThese are short term, unsecured negotiable instrument in bearer from issued by the commercial banks.<\/p>\n

    \"KSEEB<\/p>\n

    Question 7.
    \nWhat is call money?
    \nAnswer:
    \nCall money is a method by which banks faced with temporary shortage of cash, will borrow short term finance from other banks.<\/p>\n

    Question 8.
    \nWhat is bankers acceptance?
    \nAnswer:
    \nA commercial bill can be discounted with the banker before its date of maturity which is called as banker\u2019s acceptance.<\/p>\n

    Question 9.
    \nWhat is primary capital market?
    \nAnswer:
    \nIt also known as New Issue Market or Stock Market. It mobilizes the funds from the investors by the directly issuing securities.<\/p>\n

    Question 10.
    \nWhat is secondary capital market?
    \nAnswer:
    \nIt is a market for the purchase & sale of second hand or existing securities. This market creates liquidity & easy marketability to the securities.<\/p>\n

    Question 11.
    \nName the two depositories operating in India.
    \nAnswer:
    \nNSDL (National Securities depository Account) CDSL (Central Depository Service Limited)<\/p>\n

    Question 12.
    \nState any two depository services.
    \nAnswer:<\/p>\n

      \n
    • A Depository helps in converting physical certificates in to electronic holding.<\/li>\n
    • It enables e-trading to the investors.<\/li>\n<\/ul>\n

      Question 13.
      \nState any two objectives of SEBI
      \nAnswer:
      \nDevelopment of securities market & Protection of Interest of Investment.<\/p>\n

      Question 14.
      \nWho is a bulls speculator?
      \nAnswer:
      \nBulls are speculator on the stock exchange who always expect a rise in the prices of securities.<\/p>\n

      Question 15.
      \nWho is a bear speculator?
      \nAnswer:
      \nBear are the speculator on the stock exchange who always expects a fall in the prices of securities.<\/p>\n

      Question 16.
      \nGive the meaning of spot delivery?
      \nAnswer:
      \nIt means securities are delivered to the purchaser and payment is received immediately or at the spot.<\/p>\n

      Question 17.
      \nWhat do you mean forward delivery?
      \nAnswer:
      \nHere the securities are transferred to the purchaser immediately and payment is received at later date.<\/p>\n

      Question 18.
      \nWhat are blue chips?
      \nAnswer:
      \nIn stock market it represents shares with high market capitalization & also a major share included in the main index of stock exchange.<\/p>\n

      Question 19.
      \nWhat are commercial bills?
      \nAnswer:
      \nIt is a negotiable & self liquidating money market instruments with low risk. It is a bill of exchange used to finance the working capital requirements of business organization.<\/p>\n

      Question 20.
      \nState two difference between capital & money market.
      \nAnswer:<\/p>\n\n\n\n\n\n
      SI no.<\/td>\nMoney Market<\/td>\nCapital market<\/td>\n<\/tr>\n
      1.<\/td>\nInstruments of highly liquid.<\/td>\nInstruments are relatively less liquid.<\/td>\n<\/tr>\n
      2.<\/td>\nRate of returns is low<\/td>\nRate of returns is high<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      Question 21.
      \nDefine stock exchange.
      \nAnswer:
      \nStock exchange are organized auction markets where buyers & sellers come together through their brokers to effective transactions in securities admitted to listing on the exchange.<\/p>\n

      Question 22.
      \nState any two features of stock exchange
      \nAnswer:
      \nEnsures safety of funds. & Evaluation of securities.<\/p>\n

      Question 23.
      \nWhat is DEMAT accounting?
      \nAnswer:
      \nIt is an account in which all securities are held electronically by cancelling paper certificates through a process called dematerialization.<\/p>\n

      Question 24.
      \nState any two functions of SEBI.
      \nAnswer:<\/p>\n

        \n
      • Promoting & regulation self-regulator organization<\/li>\n
      • Prohibiting insider trading in securities.<\/li>\n<\/ul>\n

        Question 25.
        \nWho is lame duck?
        \nAnswer:
        \nLame duck is a bear speculator who is not able to settle his transaction on his settlement day.<\/p>\n

        Question 26.
        \nWho is stag?
        \nAnswer:
        \nA stag is a cautious speculator. He applies for a large number of shares in the new issue market on expectation that the price of the share will rise & sold for a premium.<\/p>\n

        Question 27.
        \nWhat is arbitrage?
        \nAnswer:
        \nThe operators bring stability in the prices of the securities among various stock exchanges. The operators buy the securities from the stock exchanges where the prices are low and sell it in other stock exchanges where the prices are higher.<\/p>\n

        Question 28.
        \nWhat is capital market? Explain the features of capital market.
        \nAnswer:
        \nCapital market is a market for medium & long terms funds. Where by long & intermediate term funds are & made available to individuals, business & government.<\/p>\n

        Question 29.
        \nWhat is REPO and Reverse REPO?
        \nAnswer:
        \nREPO: REPO means an instruments for borrowing funds by selling securities with an agreement to repurchase the securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed.<\/p>\n

        Reverse REPO: Reverse REPO means an instrument for lending funds by purchasing securities with an agreement to repurchase the securities on a mutually agreed future date at an agreed price which includes interest for funds borrowed.<\/p>\n

        \"KSEEB<\/p>\n

        2nd PUC Business Studies Financial Markets Four Marks Questions and Answers<\/strong><\/p>\n

        Question 1.
        \nExplain any five money market instruments.
        \nAnswer:
        \nTreasury bills: A treasury bills an instrument of short term borrowing by the Government of India maturing in less than one year.<\/p>\n

        Call Money: Call money is a method by which banks faced with temporary shortage of cash will borrow short term finance from other banks.<\/p>\n

        Certificate of Deposit: These are short term, unsecured negotiable instrument in bearer from issued by the commercial banks. They can be issued to individuals, corporations & companies.<\/p>\n

        Commercial Paper: Commercial paper is a short term unsecured promissory note, negotiable & transferable by endorsement & delivery with a fixed maturity period issued by the companies.<\/p>\n

        Commercial Bills: commercial bills are short terms, negotiable & self liquidating money market instrument with low risk. It is used to finance the working capital requirement of business organization.<\/p>\n

        Question 2.
        \nExplain briefly the trading procedure on a stock exchange or market.
        \nAnswer:
        \nSelection of broker: The first step is to select a broker who will buy or sell securities on behalf of the investors as trading of securities can only be done through SEBI registered brokers<\/p>\n

        Opening DEMAT Account: The next step is to open a DEMAT account in order to trade. It is an account in which all securities are held electronically by cancelling paper certificates through a process called dematerialization.<\/p>\n

        Placing the order: The investors should specify the securities to be bought or sold & the price range to make a order to broker either personally or through telephone, mobiles, emails etc.<\/p>\n

        Executing the Order: The brokers issues a contract note & copy of the contract note is sent to the investors: The contract note contains the name & the period of the securities, names of the parties, brokerage charged.<\/p>\n

        Settlement: The mode of settlement depends upon the nature of the contract. The settlement period is T+2. That means any tread taking place on Monday gets settlement by Wednesday<\/p>\n

        Question 3.
        \nState any ten depository service offered by a depository.
        \nAnswer:<\/p>\n

          \n
        1. It keeps custody of investors\u2019holdings.<\/li>\n
        2. It eliminates the risk involved with the theft, forgery, damages of certificates.<\/li>\n
        3. It reduces the brokerage charges.<\/li>\n
        4. It reduces time required to clear each transaction as there is no paper work involved.<\/li>\n
        5. It helps the investors to apply for new issues, as present public issues are taking place only DEMAT mode.<\/li>\n
        6. Company pays dividend to the investors in to their bank account registered in the DEMAT account<\/li>\n
        7. All benefits like right issues, bonus shares are paid directly in to investors DEMAT account.<\/li>\n
        8. Stamp duty is not applicable for transfer of securities in DEMAT mode.<\/li>\n
        9. It enables e-banking to the investors. Investors can buy or sell shares through internet.<\/li>\n
        10. The procedure of pledging DEMAT shares is easy to raise money from leaders.<\/li>\n<\/ol>\n

          Question 4.
          \nWhat is stock exchange? Explain the features of stock exchange.
          \nAnswer:
          \nStock exchange is an organized market for the purchase and sale of government & listed industries financial securities. It is a secondary market for securities, that means, the securities which are already issued in the primary market, are traded in this market.
          \nThe Main features of stock exchanges are:<\/p>\n

            \n
          • It is an organized market for securities<\/li>\n
          • It deals with existing or second hand securities.<\/li>\n
          • It regulates and control business which deals with securities.<\/li>\n
          • It doesn\u2019t buy or sell any securities it only facilitates free & fair trade.<\/li>\n
          • Stock exchanges are the financial barometer of national economy of the country.<\/li>\n<\/ul>\n

            Question 5.
            \nExplain the objectives of SEBI.
            \nAnswer:
            \nSEBI – Securities Exchange Board of India was established by Government of India in 1988 as a regulator of capital market. The main idea of SEBI was to promote healthy growth of securities market and to provide protection for investors.
            \nObjectives of SEBI are as follows:
            \n1. Development of securities market: The main objective of SEBI is to develop the securities market. It strictly prohibits the malpractices of brokers, merchants and companies involved in securities market and encourage transparent transaction dealing in the stock exchanges.<\/p>\n

            2. Protection of Interest of Investment: SEBI aims at protecting the right & interest of investors through accurate and authentic information to the investors. SEBI can prosecute the companies if they fail to follow the rules and regulation laid down by SEBI.<\/p>\n

            3. Regulation of capital market: SEBI regulate both the primary and secondary capital markets. Every company issuing the shares to the public has to take the clearance from SEBI and follow the rules regarding the issue, settlement and speculation etc.<\/p>\n

            Question 6.
            \nExplain the functions of SEBI.
            \nAnswer:
            \nFunctions:<\/p>\n

              \n
            • Regulating the business in stock exchanges & any other securities market<\/li>\n
            • Registering & regulating the working of mutual funds<\/li>\n
            • Promoting & regulation self-regulatory organization<\/li>\n
            • Prohibiting insider trading in securities.<\/li>\n
            • Regulating substantial acquisition of shares & take-over of companies.<\/li>\n
            • Conducting enquiries & audit of stock exchange.<\/li>\n
            • Levying fees & other changes for carrying out its functions.<\/li>\n
            • Conducting research for the above purposes.<\/li>\n
            • Promoting investors education & training of intermediaries of securities market.<\/li>\n
            • Registering & regulating the working of capital market intermediaries.<\/li>\n<\/ul>\n

              \"KSEEB<\/p>\n

              2nd PUC Business Studies Financial Markets Eight Marks Questions and Answers<\/strong><\/p>\n

              Question 1.
              \nState any ten functions of SEBI
              \nAnswer:
              \nFunctions:<\/p>\n

                \n
              • Regulating the business in stock exchanges & any other securities market<\/li>\n
              • Registering & regulating the working of mutual funds<\/li>\n
              • Promoting & regulation self-regulatory organization<\/li>\n
              • Prohibiting insider trading in securities.<\/li>\n
              • Regulating substantial acquisition of shares & take-over of companies.<\/li>\n
              • Conducting enquiries & audit of stock exchange.<\/li>\n
              • Levying fees & other changes for carrying out its functions.<\/li>\n
              • Conducting research for the above purposes.<\/li>\n
              • Promoting investors education & training of intermediaries of securities market.<\/li>\n
              • Registering & regulating the working of capital market intermediaries.<\/li>\n<\/ul>\n

                2nd PUC Business Studies Financial Markets Five Marks Questions and Answers<\/strong><\/p>\n

                Question 1.
                \nList any ten stock exchanges operating in India.
                \nAnswer:
                \nMadhay Pradesh stock Exchange, Indore (Madhya Pradesh) Magadha Stock Exchange, Patna (Bihar)
                \nCochin Stock Exchange, Cochin (Kerala)
                \nMadras Stock Exchange, Chennai (Tamil Nadu)
                \nDelhi Stock Exchange, (Delhi)
                \nBangalore Stock Exchange, Bangalore (Karnataka)
                \nCanara Stock Exchange, Mangalore (Karnataka)
                \nUP Stock Exchange, Kanpur (Uttar Pradesh)
                \nPune Stock Exchange, Pune (Maharashtra)
                \nMeerut Stock Exchange, Meerut (Uttar Pradesh)<\/p>\n","protected":false},"excerpt":{"rendered":"

                You can Download Chapter 10 Financial Markets Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations. Karnataka 2nd PUC Business Studies Question Bank Chapter 10 Financial Markets 2nd PUC Business Studies Financial Markets Text Book …<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[82],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts\/8511"}],"collection":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/comments?post=8511"}],"version-history":[{"count":0,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts\/8511\/revisions"}],"wp:attachment":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/media?parent=8511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/categories?post=8511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/tags?post=8511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}