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प्रश्न
The financial market plays an important role in the allocation of scarce resources in an economy by performing many important functions.’ Explain any three such functions
उत्तर
A financial market is a market for the creation and exchange of financial assets (such as shares and debentures).
Major functions of a financial market:
i. Mobilising savings: The financial market acts as a channel for mobilising savings to productive use. This is done by providing savers a platform for transferring investment. It provides savers a wide choice of investment. In this way, it ensures that the funds are directed towards the most productive investment.
ii. Establishing price: The financial market facilitates the interaction between those who demand securities (households) and the suppliers of securities (business firms). This helps in establishing a competing price for the securities.
iii. Providing liquidity to assets: By easing the process of sale and purchase of securities, the financial market provides liquidity to securities. That is through the financial market, securities can be easily converted to cash.
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संबंधित प्रश्न
Distinguish between money market and capital market.
Distinguish between Primarymarket and Secondary Market.
A market where short term funds are borrowed and lent.
Match the pairs :
| Group "A" | Group "B" | ||
| 1. | Private placement | a. | Recurring Deposit |
| 2. | N.S.D.L | b. | Dividend |
| 3. | Overdraft facility | c. | Evidence of deposit |
| 4. | Deposit receipt | d. | Interest |
| 5. | Returns on share | e. | Depository out of India |
| f. | A public company collecting capital privately |
||
| g. | Depository in India | ||
| h. | Evidence of ownership | ||
| i. | A private company collecting capital privately |
||
| j. | Current account |
What is financial market? And what is its role?
Answer the following question.
What is meant by the 'Allocative Function' of Financial Markets?
State whether the following statement is true or false
A Financial Market is a market in which people trade financial securities and derivatives at high transaction costs.
Explain the following term/concept.
Financial market
Explain the following term/concept.
Capital market
Study the following case/situation and express your opinion.
Mr. X is the CFO ( Chief Financial Officer ) of PQR Co. Ltd. which is a reputed company in the field of construction business. Often Mr. X has to decide on investing surplus funds of the company for short durations. And at times, he also has to decide the sources from where he can raise funds for short durations.
- Assume on behalf of the company Mr. X has Rs. 5 lakhs and wants to invest for a short period. Should he buy Equity shares or a Certificate of Deposit?
- The company has surplus funds and wants to invest it. However, he needs the money back in 4 months, so should he invest in Treasury Bills or Government Securities?
- Can the company issue a Certificate of Deposit?
In order to get feedback about its recently launched immunity-boosting ayurvedic medicine, Atulya Limited conducted an online survey using a questionnaire, to gather customer views and opinions. Identify the marketing function being used by Atulya Limited.
Which of the following statements is incorrect regarding Financial Markets?
Full form of IFCI
Match the pairs:
| Group 'A' | Group 'B' |
| (a) Investment in debenture | (1) Deals with acquisition and use of capital. |
| (b) Financial market | (2) Must inform the stock exchange about dividend declaration. |
| (c) Price of shares mentioned in the prospectus | (3) Trading of financial securities |
| (d) Corporate finance | (4) Safe and secure investment |
| (e) Listed company | (5) Must inform the government about dividend declaration |
| (6) Fixed price issue method | |
| (7) Risky investment | |
| (8) Trading of commodities. | |
| (9) Deals with acquisition and use of assets. | |
| (10) Book-Building Method. |
What is meant by the financial market?
Correct the underlined word and rewrite the following:
IPO is offered to existing equity shareholders.
