India’s largest domestic investor | Class 12 Business Studies Chapter Financial Markets, Financial Markets NCERT Solutions

Welcome to the NCERT Solutions for Class 12 Business Studies - Chapter Financial Markets. This page offers a step-by-step solution to the specific question from Exercise 3, Question 4: . With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.

Question 4:

India’s largest domestic investor Life Insurance Corporation of India has once again come to government’s rescue by subscribing 70% of Hindustan Aeronautics’ ₹4,200-crore initial public offering.

a. Which market is being reflected in the above case?
b. State which method of floatation in the above identified market is being highlighted in the case? (Primary Market)
c. Explain any two other methods of floatation. (Private Placement, Offer through prospectus, offer for sale).

Answer:

a. Which market is being reflected in the above case?

Ans. The market that has been reflected in the above case is Primary Market. Primary Market is also known as the new issues market, as this market deals with the new securities issued for the first time.

b. State which method of floatation in the above identified market is being highlighted in the case?

Ans. The floatation method that has been highlighted in this case is Right 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 ‘right’ to buy new shares in proportion to the number of shares they already possess. This right is called the ‘pre-emptive right’ of the existing shareholders.

c. Explain any two other methods of floatation.

Ans. Methods of flotation are:

1. Offer Through Prospectus: Under this method, a company invites public to subscribe for its shares through issue of prospectus, which makes a direct appeal to investors to invest in the company, through an advertisement in the newspapers and magazines.

The contents of prospectus must be according to the provisions of Companies Act and SEBI guidelines.
The issue must be listed on at least one stock exchange.
The issue may be underwritten to save the company from under subscription.

2. Private Placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It is considered beneficial because:

It helps to raise funds more quickly than a public issue.
The cost of flotation, which is quite expensive in other alternatives, is saved.

Other Questions of Chapter Financial Markets

Discuss the role of SEBI in regulating the financial markets in India.

What are the main functions of the financial market?

Differentiate between Money Market and Capital Market.

What are the features of the Money Market?

“Money Market is essentially a Market for short term funds.” Discuss.

Explain the recent Capital Market reforms in India.

What is the common name for Beneficiary Owner Account, which is to be opened by the investors for trading in securities?

Lalita wants to buy shares of Akbar Enterprises, through her broker Kushvinder. She has a Demat Account and a bank account for cash transactions in the securities market. Discuss the subsequent steps involved in the screen-based trading for buying and selling of securities in this case.

Name any two details that need to be provided by the investor to the broker while filling a client registration form.

What are the objectives of SEBI?

Popular questions of class 12 Business Studies

What are the steps taken by management in the planning process?

Why is management considered to be a multi-dimensional concept?

Explain the procedure for selection of employees.

Indian Railways has launched a new broad gauge solar power train which is going to be a path breaking leap towards making trains greener and more environment friendly. The solar power DEMU (Diesel Electric Multiple Unit) has 6 trailer coaches and is expected to save about 21,000 liters of diesel and ensure a cost saving of Rs 12, 00,000 per year. Name the objectives of management achieved by Indian Railways in the above case.

The government of India announced Demonetization of ₹ 500 and ₹ 1,000 currency notes with effect from the midnight of November 8, 2016. As a result, the existing ₹ 500 and ₹ 1,000 currency notes ceased to be legal tender from that date. New currency notes of the denomination of ₹ 500 and ₹ 2,000 were issued by Reserve Bank of India after the announcement.

This step resulted in a substantial increase in the awareness about and use of Point of Sale machines, e-wallets, digital cash and other modes of cashless transactions. Also, increased transparency in monetary transactions and disclosure led to a rise in government revenue in the form of tax collection.

a. Enumerate the dimensions of the business environment highlighted above.
b. State the features of Demonetization.

How would you characterize the business environment? Explain with examples, the difference between general and specific environment.

Discuss the relevance of Taylor and Fayol’s contribution in the contemporary business environment.

Define scientific management. State any three of its principles.

Explain the qualities of a good leader? Do the qualities alone ensure leadership success?

National Digital Library of India (NDL India) is a pilot project initiated by the HRD ministry. It works towards developing a framework of virtual repository of learning resources with a single-window search facility. It provides support to all academic levels including researchers, life-long learners and differently-abled learners free of cost. State the dimensions of business environment highlighted above.

Recently Viewed Questions of Class 12 Business Studies

What is the role of NGOs in Consumer Protection?

Why is understanding the business environment crucial for managers?

What is the role of the Central Consumer Protection Authority (CCPA)?

A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture in totality. It is facing lot of problems in delays in decision making. As the result it is not able to adapt to changing business environment. The work force is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. You are to advise the company with regard to change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.

State the different networks of grapevine communications.

Kaul Consultants have launched www.naukaripao.com exclusively for senior management professionals. The portal lists out senior level jobs and ensures that the job is genuine through rigorous screening process.

a. State the source of recruitment highlighted in the case above.
b. State four benefits of the above identified source of recruitment.

Why are rules considered to be plans?

Can a large sized organisation be totally centralised of decentralised? Give your opinion.

Explain how management is both an art and a science.

What is the meaning of organizing in management?

Study Tips for Answering NCERT Questions:

NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:

Read the question carefully and focus on the core concept being asked.
Reference examples and data from the chapter when answering questions about Financial Markets.
Review previous year question papers to get an idea of how such questions may be framed in exams.
Practice answering questions within the time limit to improve your speed and accuracy.
Discuss your answers with your teachers or peers to get feedback and improve your understanding.

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