Commerce Exam > Commerce Notes > Business Studies (BST) Class 12 > Indirect Questions - Financial Market
Indirect Questions - Financial Market | Business Studies (BST) Class 12 - Commerce PDF Download
Indirect Questions:
1.The directors of a company want to modernise its plant and machinery by making a public issue of shares. They wish to approach stock exchange, while the finance manager prefers to approach a consultant for the new public issue of shares. Advise the directors whether to approach stock exchange or a consultant for new public issue of shares and why? Also advise about the different methods which the company may adopt for the new public issue of shares.
2.You are a finance expert. One of your friends comes to you and tells you that the capital market and the money market are one and the same, whereas you differ with him. How would you convince him? Give any four reasons.
3. SEBI is the watch dog of the securities markets”. Do you agree? Give reasons.
4. “In today’s Commercial world, the stock exchange performs many vital functions.” Do you agree? Give any four reasons in support of your answer.
5. “Primary markets contribute to capital formation directly, secondary markets do so indirectly.” Explain
6. ‘Money market instruments are more liquid than capital market instruments’. Comment.
7. ‘Stock market imparts liquidity to investment’. Comment.
8.“Stock market quotations contribute to better allocation of capital and promoting the habits of savings and investments”. Explain.
The document Indirect Questions - Financial Market | Business Studies (BST) Class 12 - Commerce is a part of the Commerce Course Business Studies (BST) Class 12.
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FAQs on Indirect Questions - Financial Market - Business Studies (BST) Class 12 - Commerce
| 1. What is the role of financial markets in commerce? |  |
Ans. Financial markets play a crucial role in commerce by providing a platform for individuals and businesses to buy and sell financial instruments such as stocks, bonds, and derivatives. These markets facilitate the flow of capital, allowing businesses to raise funds for investments and individuals to invest their savings. Additionally, financial markets help determine the prices of financial assets and provide liquidity for investors.
| 2. How do financial markets impact the economy? | |
Ans. Financial markets have a significant impact on the economy. They contribute to economic growth by channeling funds from savers to borrowers, enabling businesses to expand and create jobs. Moreover, financial markets allow for risk management through insurance and hedging products. They also provide valuable information about the overall health of the economy through indicators like stock market indices and interest rates.
| 3. What are the different types of financial markets? | |
Ans. Financial markets can be categorized into various types. The primary markets are where new securities are issued, such as initial public offerings (IPOs) or corporate bond offerings. Secondary markets, on the other hand, facilitate the trading of existing securities among investors. Other types of financial markets include money markets, where short-term debt instruments are traded, and derivatives markets, where contracts based on underlying assets are bought and sold.
| 4. How do financial markets affect individual investors? | |
Ans. Financial markets provide opportunities for individual investors to participate in wealth creation and wealth preservation. By investing in stocks, bonds, or mutual funds, individuals can potentially earn returns on their investments. However, financial markets also involve risks, such as market fluctuations and the possibility of losses. It is crucial for individual investors to conduct research, diversify their portfolios, and seek professional advice to make informed investment decisions.
| 5. How are financial markets regulated? | |
Ans. Financial markets are subject to regulation to ensure fairness, transparency, and stability. Regulatory bodies, such as the Securities and Exchange Commission (SEC) in the United States or the Financial Conduct Authority (FCA) in the United Kingdom, oversee and enforce regulations. These regulations aim to protect investors, prevent fraud and manipulation, and maintain the integrity of the financial system. Examples of regulations include disclosure requirements, licensing of market participants, and restrictions on insider trading.
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