Class 12 Finance Chapter 11 Stock Exchange

Class 12 Finance Chapter 11 Stock Exchange 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 12 Finance Chapter 11 Stock Exchange Solutions in English and select need one. AHSEC Class 12 Finance Chapter 11 Stock Exchange Solutions Download PDF. HS 2nd Year Finance Textual Solutions.

Class 12 Finance Chapter 11 Stock Exchange

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 12 Banking Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Finance Textual Solutions English Medium for All Chapters, You can practice these here.

Stock Exchange

Chapter: 11

Unit – 3 Capital Market

A. Write the correct answer as directed.

1. Which of the following regulates the stock exchange in India?

(i) RBI.

(ii) IRDA.

(iii) SEBI.

(iv) IBA.

(Choose the correct answer)

Ans: (iii) SEBI.

2. Stock exchange is an organized market.

(State whether the statement is true or false)

Ans: True.

3. Stock market transacts in commodities.

(State whether the statement is true or false)

Ans: False.

4. Bulls expect a __________ in price in the future.

(Fill in the gap)

Ans: Rise (Increase).

5. Write the full form of BSE.

Ans: Bombay Stock Exchange.

6. Write the full form of NASDAQ.

Ans: National Association of Securities Dealers Automated Quotations.

7. Write the full form of NSE.

Ans: National Stock Exchange.

8. Write the full form of SEBI.

Ans: Securities and Exchange Board of India.

9. Who is a Jobber?

Ans: A Jobber is an independent dealer in securities who buys and sells shares on his own account to earn profit from price differences.

B. Short Answer Questions.

1. What is Stock Exchange?

Ans: A Stock Exchange is an organised market where securities such as shares, debentures and bonds are bought and sold according to prescribed rules and regulations.

2. Write two features of Stock Exchange.

Ans: (i) It is an organised and regulated market.

(ii) It provides a ready market for buying and selling securities.

3. Write two names of Stock Exchanges functioning in India.

Ans: (i) Bombay Stock Exchange (BSE).

(ii) National Stock Exchange (NSE).

4. State two functions of Stock Exchange.

Ans: (i) It provides liquidity and marketability to securities.

(ii) It helps in mobilising savings and raising capital.

5. What is Listing of Securities?

Ans: Listing of securities means the admission of a company’s securities for trading on a recognised stock exchange.

6. Write two objectives of Listing of Securities.

Ans: (i) To provide a ready market for securities.

(ii) To protect the interests of investors.

7. Write two conditions of Listing of Securities.

Ans: (i) The company must comply with the rules and regulations of the recognised stock exchange.

(ii) The company must fulfil the prescribed listing requirements.

8. Who is a Stock Broker?

Ans: A Stock Broker is a member of a recognised stock exchange who buys and sells securities on behalf of investors and earns brokerage.

9. Write two qualifications of a Stock Broker.

Ans: (i) He must be a member of a recognised stock exchange.

(ii) He must obtain registration from SEBI.

10. State two functions of a Stock Broker.

Ans: (i) He buys and sells securities on behalf of clients.

(ii) He provides investment advice and executes orders of investors.

11. Who is a Sub-Broker?

Ans: A Sub-Broker is an agent of a registered stock broker who assists investors in buying and selling securities.

12. State two functions of a Sub-Broker.

Ans: (i) He brings investors to the stock broker.

(ii) He assists clients in buying and selling securities through the stock broker.

13. How can a Sub-Broker be registered?

Ans: A Sub-Broker can be registered by obtaining registration through a recognised stock broker and getting a certificate of registration from SEBI.

14. State any two kinds of Brokers.

Ans: (i) Jobber.

(ii) Tarawaniwala.

15. Who is a Bull?

Ans: A Bull is a speculator who expects the prices of securities to rise in the future and purchases securities to earn profit.

16. Who is a Bear?

Ans: A Bear is a speculator who expects the prices of securities to fall in the future and sells securities to earn profit.

17. Who is a Stag?

Ans: A Stag is a speculator who applies for new shares with the intention of selling them immediately after allotment to earn a quick profit.

C. Long answer questions (Type-I):

1. State the features of Stock Exchange.

Ans: The main features of a Stock Exchange are:

(i) It is an organised and regulated market.

(ii) It deals only in listed securities.

(iii) It provides a ready market for buying and selling securities.

(iv) Transactions are conducted according to the rules and regulations of the stock exchange.

(v) It is regulated by the Securities and Exchange Board of India (SEBI).

2. Write five functions of Stock Exchange.

Ans: The important functions of a Stock Exchange are:

(i) It provides liquidity and marketability to securities.

(ii) It helps in mobilising savings.

(iii) It facilitates capital formation.

(iv) It determines fair market prices of securities.

(v) It ensures safety and protection to investors.

3. What is Listing of Securities? State the objectives of Listing of Securities.

Ans: Listing of Securities means the admission of a company’s securities for trading on a recognised stock exchange.

Objectives of Listing of Securities:

(i) To provide a ready market for securities.

(ii) To protect the interests of investors.

(iii) To ensure free transferability of securities.

(iv) To provide regular information about listed companies.

(v) To increase the goodwill and reputation of the company.

4. State the formalities required for Listing of Securities.

Ans: The formalities required for listing of securities are:

(i) Submission of an application to the recognised stock exchange.

(ii) Submission of the Memorandum and Articles of Association.

(iii) Submission of the Prospectus and other required documents.

(iv) Payment of the prescribed listing fees.

(v) Compliance with the rules and regulations of the stock exchange.

5. State the conditions of Listing of Securities.

Ans: The conditions for listing of securities are:

(i) The company must comply with the rules and regulations of the recognised stock exchange.

(ii) The company must fulfil the prescribed listing requirements.

(iii) The company should submit all necessary documents.

(iv) The minimum public shareholding requirement should be fulfilled.

(v) The company should agree to comply with the listing agreement.

6. Who is a Stock Broker? State the qualifications of a Stock Broker.

Ans: A Stock Broker is a member of a recognised stock exchange who buys and sells securities on behalf of investors and earns brokerage.

Qualifications of a Stock Broker:

(i) He must be a member of a recognised stock exchange.

(ii) He must obtain registration from SEBI.

(iii) He should possess sound financial position.

(iv) He should have knowledge and experience of the securities market.

(v) He should follow the rules and regulations of the stock exchange.

7. Who is a Stock Broker? State the registration procedure of a Stock Broker.

Ans: A Stock Broker is a member of a recognised stock exchange who buys and sells securities on behalf of clients.

Registration Procedure:

(i) He should become a member of a recognised stock exchange.

(ii) He should apply to SEBI through the stock exchange.

(iii) He should fulfil the eligibility conditions prescribed by SEBI.

(iv) He should pay the prescribed registration fee.

(v) SEBI issues a Certificate of Registration after verification.

8. Write five functions of a Stock Broker.

Ans: (i) Buys and sells securities on behalf of clients.

(ii) Executes purchase and sale orders.

(iii) Advises investors regarding investment.

(iv) Maintains records of transactions.

(v) Receives brokerage for services rendered.

9. Who is a Sub-Broker? State the job of a Sub-Broker.

Ans: A Sub-Broker is an agent of a registered stock broker who assists investors in buying and selling securities.

Jobs of a Sub-Broker:

(i) Introduces investors to the stock broker.

(ii) Assists clients in buying and selling securities.

(iii) Collects application forms and documents.

(iv) Provides market information to investors.

(v) Acts as a link between investors and the stock broker.

10. Who is a Stock Broker? State the various kinds of Stock Broker.

Ans: A Stock Broker is a member of a recognised stock exchange who buys and sells securities on behalf of investors and earns brokerage.

Kinds of Stock Brokers:

(i) Jobber – Deals in securities on his own account to earn profit.

(ii) Tarawaniwala – Acts both as a broker and a jobber.

(iii) Commission Broker – Buys and sells securities on behalf of clients for commission.

(iv) Floor Broker – Executes orders on the trading floor of the stock exchange.

(v) Remisier – Brings clients to stock brokers and receives a share of the brokerage.

D. Long Answer Questions (Type-II): 

1. What is Stock Exchange? Discuss the features of Stock Exchange.

Ans: A Stock Exchange is an organised and regulated market where securities such as shares, debentures, bonds and government securities are bought and sold according to the rules and regulations prescribed by the stock exchange. It acts as a link between investors and companies and provides a platform for the purchase and sale of securities. In India, stock exchanges are regulated by SEBI (Securities and Exchange Board of India).

Features of Stock Exchange:

(i) Organised Market: A stock exchange is a well-organised market with definite rules and regulations for trading in securities.

(ii) Deals in Listed Securities: Only the securities of companies listed on the recognised stock exchange can be traded.

(iii) Regulated by SEBI: The working of stock exchanges in India is regulated and supervised by SEBI to ensure fair and transparent trading.

(iv) Provides Liquidity: It provides a ready market where investors can easily buy and sell securities whenever required.

(v) Fixed Rules and Regulations: All transactions are carried out according to the rules and bye-laws of the stock exchange.

(vi) Provides Fair Price: The prices of securities are determined by the forces of demand and supply, ensuring fair market value.

(vii) Protects Investors: The stock exchange safeguards the interests of investors by ensuring transparency and preventing unfair trade practices.

(viii) Mobilises Savings: It encourages people to invest their savings in securities, thereby promoting capital formation and economic development.

2. What is Stock Exchange? Discuss the functions of Stock Exchange.

Ans: A Stock Exchange is an organised and regulated market where securities such as shares, debentures, bonds and government securities are bought and sold according to prescribed rules and regulations. It provides a common platform for investors and companies to trade in securities and is regulated by SEBI.

Functions of Stock Exchange:

(i) Ready Market for Securities: A stock exchange provides a continuous and ready market for the purchase and sale of securities.

(ii) Liquidity and Marketability: It enables investors to convert their securities into cash quickly and easily.

(iii) Mobilisation of Savings: It encourages people to invest their savings in securities and helps in capital formation.

(iv) Fair Price Determination: The prices of securities are determined by the forces of demand and supply, ensuring fair market value.

(v) Safety of Transactions: The stock exchange ensures safe and transparent dealings through its rules and regulations.

(vi) Economic Development: It helps companies raise long-term funds for expansion and industrial growth, thereby contributing to the country’s economic development.

(vii) Protection of Investors: The stock exchange protects investors’ interests by ensuring fair trading practices and preventing fraudulent activities.

(viii) Dissemination of Information: It provides regular information about the prices and performance of listed securities to investors.

3. Who is a stock broker? State the functions of a stock broker.

Ans: A Stock Broker is a member of a recognised stock exchange who buys and sells securities such as shares, debentures and bonds on behalf of investors. He acts as an intermediary between buyers and sellers and earns brokerage for the services rendered.

Functions of a Stock Broker:

(i) Buying and Selling of Securities: A stock broker purchases and sells securities on behalf of his clients.

(ii) Execution of Orders: He executes the purchase and sale orders of investors promptly and efficiently.

(iii) Providing Investment Advice: He guides and advises investors regarding suitable investment opportunities.

(iv) Maintaining Records: He maintains proper records of all transactions carried out on behalf of his clients.

(v) Collecting Brokerage: He receives brokerage or commission for the services rendered in buying and selling securities.

(vi) Providing Market Information: He provides investors with up-to-date information about market prices and trends.

(vii) Helping in Settlement of Transactions: He assists in the settlement and transfer of securities after the completion of transactions.