Class 12 Finance Chapter 9 Capital Market

Class 12 Finance Chapter 9 Capital Market 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 9 Capital Market Solutions in English and select need one. AHSEC Class 12 Finance Solutions Download PDF. HS 2nd Year Finance Textual Solutions.

Class 12 Finance Chapter 9 Capital Market

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.

Capital Market

Chapter: 9

Unit – 3 Capital Market

A. Very Short Questions Answer:

1. Who are the main suppliers of funds in the capital market? 

Ans:The main suppliers of funds in the capital market are individual investors, financial institutions, banks, insurance companies, mutual funds, and foreign investors. 

B. Short Answer Questions: 

1. What is the capital market?

Ans: The capital market is a market where long-term funds are raised and invested through financial instruments such as shares, debentures, and bonds.

2. Who need fund from the capital market?

Ans: The Government, public sector undertakings, companies, and other business organisations need funds from the capital market for long-term investment and expansion.

3. Who are the suppliers of funds in the capital market?

Ans: The main suppliers of funds in the capital market are individual investors, banks, insurance companies, mutual funds, financial institutions, and foreign investors.

4. Write two features of the capital market.

Ans: (i) It deals in long-term funds.

(ii) It provides funds for business expansion and economic development.

5. Write two functions of the capital market.

Ans: (i) It mobilises long-term savings from investors.

(ii) It provides long-term finance to businesses and the Government.

6. How does the capital market help investors to invest in long-term financial instruments?

Ans: The capital market provides investors with various long-term financial instruments such as shares, debentures, and bonds, enabling them to invest their savings and earn returns over time.

C. Long Answer Questions (Type-I): 

1. Explain five functions of capital market.

Ans: Functions of the Capital Market:

(i) Link between Savers and Investors: The capital market mobilises savings and channels them into productive investments.

(ii) Encourages Savings: It motivates people to save by providing various investment opportunities.

(iii) Transforms Savings into Investments: It converts savings into long-term investments by providing funds to the Government and corporate sector.

(iv) Promotes Economic Growth: It supports industrial and economic development by providing long-term finance.

(v) Ensures Stability and Benefits Investors: It helps stabilise security prices and enables investors to invest in long-term financial instruments while tracking market prices.

Conclusion:

The capital market plays a vital role in mobilising savings, promoting investment, supporting economic growth, and providing benefits to investors.

2. What is the Capital Market? State the Features of the Capital Market. 

Ans: Capital Market: The capital market is a market where long-term funds are raised and invested through financial instruments such as shares, debentures, and bonds.

Features of the Capital Market:

(i) Long-Term Funds: It provides funds for a period exceeding one year.

(ii) Deals in Long-Term Instruments: It deals in shares, debentures, bonds, and other long-term securities.

(iii) Finances Fixed Capital: It provides funds for fixed capital requirements of trade and commerce.

(iv) Various Financial Institutions: Its main institutions include stock exchanges, development banks, commercial banks, and insurance companies.

(v) High Risk: Investments in the capital market involve relatively higher risk.

Conclusion:

The capital market is an important part of the financial system. It provides long-term finance, supports economic development, and offers investment opportunities to investors.

D. Long Answer Questions (Type-II): 

1. What is the Capital Market? State the Functions of the Capital Market. 

Ans: The capital market is a market where long-term funds are raised and invested. It deals in long-term financial instruments such as shares, debentures, bonds, and government securities. It helps the Government and business organisations raise long-term capital for development and expansion.

Functions of the Capital Market:

(i) Link between Savers and Investors: The capital market acts as a link between savers and investors by mobilising savings and channelising them into productive investments.

(ii) Encourages Savings: It encourages people to save by providing various investment opportunities with attractive returns.

(iii) Transformation of Savings into Investments: It converts savings into long-term investments by providing funds to the Government and corporate sector.

(iv) Promotion of Economic Growth: It supports industrial development and promotes balanced economic growth by providing long-term finance.

(v) Stability: It helps stabilise the prices of securities and maintains confidence in the stock market.

(vi) Benefits to Investors: It provides investors with opportunities to invest in long-term financial instruments such as shares, debentures, and bonds. It also helps them monitor security prices and make better investment decisions.

Conclusion:

The capital market plays a vital role in the financial system by mobilising savings, providing long-term finance, promoting economic growth, and creating investment opportunities. It is an essential component of a country’s economic development.