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:
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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.
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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.
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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.
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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.
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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.
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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.
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“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.
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