Class 11 Finance Important Chapter 2 Financial System

Class 11 Finance Important Chapter 2 Financial System Solutions English Medium As Per AHSEC New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 11 Finance Important Solutions and select need one. AHSEC Class 11 Finance Additional Notes English Medium Download PDF. HS 1st Year Finance Important Solutions in English.

Class 11 Finance Important Chapter 2 Financial System

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 11 Banking Additional Question Answer are part of All Subject Solutions. Here we have given HS 1st Year Banking Important Notes in English for All Chapters, You can practice these here.

Financial System

Chapter: 2

IMPORTANT QUESTION AND ANSWER

Answer the Following Question:

1. What is financial dichotomy in a financial system?

Ans: It refers to the existence of both formal and informal financial sectors within the financial system.

2. How do financial institutions contribute to economic development?

Ans: They mobilize savings and provide credit to productive sectors, supporting business growth and infrastructure.

3. What are the main differences between banking and non-banking financial institutions?

Ans: Banks accept demand deposits, provide cheque facilities, and create credit; NBFIs cannot accept demand deposits or issue cheques and do not create credit.

4. What is financial deepening?

Ans: It is the increase in financial assets as a percentage of GDP, indicating greater availability of financial resources.

5. How do financial markets assist in price discovery?

Ans: By facilitating the trading of securities where prices are determined by demand and supply forces.

6. Why is liquidity important in a financial system?

Ans: Liquidity ensures funds are readily available for productive use and allows easy conversion of assets to cash.

7. What role does the Securities and Exchange Board of India (SEBI) play?

Ans: SEBI regulates the capital markets to protect investor interests and ensure fair trading.

Fill in the Blanks:

1. The Reserve Bank of India (RBI) is the _______ bank of India.

Ans: central.

2. _______ market deals with short-term financial instruments with maturity up to one year.

Ans: Money.

3. _______ financial institutions cannot accept demand deposits or issue cheques.

Ans: Non-banking.

4. Equity shares represent _______ ownership in a company.

Ans: Ownership.

5. SEBI stands for Securities and _______ Board of India.

Ans: Exchange.

6. NABARD supervises the _______ banks in India.

Ans: regional rural.

Short Notes:

1. Financial Markets.

Ans: Financial markets are platforms where financial assets like stocks, bonds, and other securities are traded. They facilitate the flow of funds from savers to borrowers efficiently. These markets include the money market for short-term funds and the capital market for long-term funds. They play a vital role in capital allocation, liquidity provision, and price discovery. Financial markets help in mobilizing savings and supporting economic growth.

2. Financial Institutions.

Ans: Financial institutions are organizations such as banks and non-banking financial companies (NBFCs) that mobilize public savings and provide credit to various sectors. They act as intermediaries linking savers and investors. Banks accept deposits and provide loans, while NBFCs offer specialized financial services without full banking privileges. These institutions are crucial for channelizing funds into productive investments, thus promoting economic development.