Class 12 Business Studies - Chapter Financial Markets NCERT Solutions | What are the functions of Financial Mark
What are the functions of Financial Market?
Financial Market plays an important role in the allocation of scarce resources in an economy by performing four important functions:
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Mobilization of saving and channelising them into the Most Productive Uses: A financial market facilitates the transfer of savings from savers to investors. Thus, it helps in Channelising surplus funds into the most productive uses.
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Facilitating price discovery: Households represent the supply of funds and the business firms represent the demand. The interaction between the demand and supply helps in the price discovery of financial asset, which is being traded in a particular market.
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Providing liquidity to financial assets: Financial market facilitates easy purchase and sale of financial assets. In doing so, they provide liquidity, which means that financial assets are easily converted into cash whenever required.
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Reducing the cost of transactions: Financial markets provide a common platform where buyers and sellers meet. It helps in saving time, effort and money of the buyers and sellers at the time of trading in the market, by providing them valuable information.
More Questions From Class 12 Business Studies - Chapter Financial Markets
- Q:-
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). - Q:-
Explain the objectives and functions of the SEBI.
- Q:-
What is the common name for Beneficiary Owner Account, which is to be opened by the investors for trading in securities?
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State any two reasons why investing public can expect a safe and fair deal in the stock market. (Point w.r.t safety of Transactions – Functions of the Stock Exchange).
- Q:-
Explain the recent Capital Market reforms in India.
- Q:-
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.
- Q:-
Name the document prepared in the process of online trading of securities that is legally enforceable and helps to settle disputes/claims between the investor and the broker.
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“Money Market is essentially a Market for short term funds.” Discuss.
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State the objective of NSE?
- Q:-
Name any two details that need to be provided by the investor to the broker while filling a client registration form.
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