Class 12 Business Studies - Chapter Financial Markets NCERT Solutions | What are the functions of the Stock Exch
What are the functions of the Stock Exchange?
Stock Exchange performs the following functions:
-
Provides Liquidity and Marketability to Existing Securities: It provides a ready and continuous market where securities are bought and sold. It gives investors the chance to disinvest or reinvest. Thus, regular dealing provides both liquidity and marketability to existing securities.
-
Pricing of Securities: It helps in determining the prices of various securities that reflect their real worth. It enables correct pricing of securities through the interplay of demand and supply. The stock market index like SENSEX, reflects the market direction and indicate day-to-day fluctuations in share prices.
-
Safety of Transactions: It is well regulated and its dealings are well-defined according to the existing legal framework. This ensures that the investing public gets a fair deal in the market.
-
Contributes to Economic Growth: In stock exchange, the process of disinvestment and reinvestment channelize the saving into productive investment avenues. This leads to capital formation and economic growth.
-
Spreading Equity Cult: It is an organised market, which takes various steps to guide and educate investors, publishes information about companies listed on the exchange and ensures better and safe trading practices. These practices have played a vital role in increasing the number of people investing in equity, thus leading to wider ownership of equity.
-
Providing Scope for Speculation: It is generally accepted that a certain degree of speculation is necessary to ensure liquidity and price continuity in the stock market. Thus, it provides sufficient scope for speculation in a restricted and controlled manner within the provisions of law.
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?
- Q:-
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.
- Q:-
“Money Market is essentially a Market for short term funds.” Discuss.
- Q:-
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.
Popular Questions of Class 12 Business Studies
- Q:-
How does planning provide direction?
- Q:-
What is meant by staffing?
- Q:-
Identify the network of social relationships which arises spontaneously due to interaction at work.
- Q:-
What is informal communication?
- Q:-
State the meaning of controlling.
- Q:-
What is meant by capital structure?v
- Q:-
What is meant by management?
- Q:-
State any two advantages of branding to marketers of goods and services?
- Q:-
What makes principles of management flexible?
- Q:-
Under which consumer right does a business firm set up consumer grievance cell?
Recently Viewed Questions of Class 12 Business Studies
- Q:-
Discuss the impact of scientific management on modern industries.
- Q:-
How does planning provide direction?
- Q:-
In an organisation all the employees take things easy and are free to approach anyone for minor queries and problems. This has resulted in everyone taking to each other and thus resulting in inefficiency in the office. It has also resulted in loss of secrecy and confidential information being leaked out. What system do you think the manager should adopt to improve communication?
- Q:-
Amrit is running a ‘transport service’ and earning good returns by providing this service to industries. Giving reason, state whether the working capital requirement of the firm will be ‘less’ or ‘more’.
- Q:-
An organisation provides security services. It requires such candidates who are reliable and don’t leak out the secrets of their clients. What steps should be incorporated in selection process?
- Q:-
In an organisation, one of the departmental manager is inflexible and once he takes a decision, he does not like to be contradicted. As a result, employees always feel they are under stress and they take least initiative and fear to express their opinions and problems before the manager. What is the problem in the way authority is being used by the manager?
- Q:-
State the two important sources of recruitment.
- Q:-
A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.
- Q:-
Ramnath is into the business of assembling and selling of televisions. Recently he has adopted a new policy of purchasing the components on three months credit and selling the complete product in cash. Will it affect the requirement of working capital? Give reason in support of your answer.
- Q:-
Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers’ expectations. The finance department blames both production and marketing for declining return on investment and bad marketing. State the quality of management that the company is lacking? What quality of management do you think the company is lacking? Explain briefly. What steps should the company management take to bring the company back on track?
- All Chapters Of Class 12 Business Studies
- All Subjects Of Class 12