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.
Following are the steps involved in the screen-based trading for buying and selling of securities:
If an investor wishes to buy or sell any security he has to first approach a registered broker or sub-broker and enter into an agreement with him. The investor has a sign a broker-client agreement and a client registration form before placing an order to buy or sell securities. He has also to provide certain other details and information. These details includes:
a. PAN Number
b. Date of birth and address
c. Educational qualification and occupation
d. Residential status (Indian/ NRI)
e. Bank account details
f. Depository account details
g. Name of any other broker with whom registered
h. Client code number in the client registration form
The broker then opens a trading account in the name of the investor.
The investor has to open a ‘Demat’ account or ‘beneficial owner’ (BO) account with a depository participants (DP) for holding and transferring securities in the demat form. He will also have to open a bank account for cash transactions in the securities market.
The investor then places an order with the broker to buy or sell shares. Clear instructions have to be given about the number of shares and the price at which the shares should be bought or sold. The broker will then go ahead with the deal at the above mentioned price or the best price available. An order confirmation slip is issued to the investor by the broker.
The broker then will go on-line and connect to the main stock exchange and match the share and best price available.
When the shares can be bought or sold at the price mentioned, it will be communicated to the broker’s terminal and the order will be executed electronically. The broker will issue a trade confirmation slip to the investor.
After the trade has been executed, within 24 hours the broker issues a Contract Note. This note contains details of the number of shares bought or sold, the price, the date and time of deal, and the brokerage charges. This is an important document as it is legally enforceable and helps to settle disputes/claims between the investor and the broker. A unique order code number is assigned to each transaction by the stock exchange and is printed on the contract note.
Now, the investor has to deliver the shares sold or pay cash for the shares bought. This should be done immediately after receiving the contract note or before the day when the broker shall make payment or delivery of shares to the exchange. This is called the pay-in day.
Cash is paid or securities are delivered on pay-in-day as the deal has to be settled and finalized on the T+2 day. The settlement cycle is on T+2 day on a rolling settlement basis, w.e.f. 1 April 2003.
On the T+2 day, the exchange will deliver the share or make payment to the broker. This is called the pay-out day. The broker then has to make payment to the investor within 24 hours of the pay-out day since he has already received payment from the exchange.
The broker can make delivery of shares in demat form directly to the investor’s demat account. The investor has to give details of his demat account and instruct his depository participant to take delivery of securities directly in his beneficial owner account.
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).
Explain the objectives and functions of the SEBI.
What is the common name for Beneficiary Owner Account, which is to be opened by the investors for trading in securities?
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).
Explain the recent Capital Market reforms in India.
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.
“Money Market is essentially a Market for short term funds.” Discuss.
State the objective of NSE?
Name any two details that need to be provided by the investor to the broker while filling a client registration form.
Distinguish between Capital Market and Money Market.
How does planning provide direction?
What is meant by staffing?
Identify the network of social relationships which arises spontaneously due to interaction at work.
What is informal communication?
State the meaning of controlling.
What is meant by capital structure?v
What is meant by management?
State any two advantages of branding to marketers of goods and services?
What makes principles of management flexible?
Under which consumer right does a business firm set up consumer grievance cell?
Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Suggest whether issue of debenture would be considered a rational decision by the company. Give reason to justify your answer. (Ans. No, Cost of Debt (10%) is more than ROI which is 8%).
Discuss the importance of motivation in directing.
Ashita and Lakshita are employees working in Dazzling enterprises dealing in costume jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4 days. They were assigned the responsibility of producing 500 bracelets each at a cost of Rs 100 per bracelet. Ashita was able to produce the required number within the stipulated time at the cost of Rs 55,000 whereas, Lakshita was able to produce only 450 units at a cost of Rs 90 per unit. State whether Ashita and Lakshita are efficient and effective. Give reasons to justify your answer.
Explain any two types of non-monetary incentives.
‘S’ Limited is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7–8 per cent and the demand for steel is growing. It is planning to set up a new steel plant to cash on the increased demand. It is estimated that it will require about `5000 crores to set up and about `500 crores of working capital to start the new plant.
a. Describe the role and objectives of financial management for this company.
b. Explain the importance of having a financial plan for this company. Give an imaginary plan to support your answer.
c. What are the factors which will affect the capital structure of this company?
d. Keeping in mind that it is a highly capital-intensive sector, what factors will affect the fixed and working capital. Give reasons in support of your answer.
How does planning reduce overlapping and wasteful activities?
Explain the importance of branding in marketing.
In an attempt to cope with Reliance Jio’s onslaught in 2018, market leader Bharti Airtel has refreshed its ₹ 149 prepaid plan to offer 2 GB of 3G/4G data per day, twice the amount it offered earlier. Name the type of plan is highlighted in the given example. ? State its three dimensions also.
What are the main objectives of financial management? Briefly explain.
Under which consumer right does a business firm set up consumer grievance cell?