Students get through the TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets which is useful for their exam preparation.

TN State Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

Very short answer questions

Question 1.
What is the classification of the Indian financial system?
Answer:
The Indian Financial System can be broadly classified into

  1. Organized Sector and
  2. Unorganized Sector

Question 2.
List out the components of the Unorganized Sector.
Answer:
The Unorganized Sector consists of

  1. Money Lenders
  2. Indigenous Bankers

TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

Question 3.
What is Money Market?
Answer:
Money Market is the market for short-term financial claims (usually one year or less).
Eg: Treasury Bills, Commercial Papers

Question 4.
Explain Spot Market.
Answer:
Spot Market is a market where the delivery of the financial instrument and payment of cash occurs immediately.

Question 5.
What are the facilities provided by Financial Market?
Answer:
Financial Market facilitates business firms as well as Governments to raise funds by issuing and selling different instruments. It also helps investors to facilitate them to invest surplus funds and earn a return.

Question 6.
How for the transaction to be placed in Financial Market?
Answer:
Financial Market transactions may take place either at a specific place or location.
Eg: Stock exchange or other mechanisms such as telephone, telex, or other electronic media.

TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

Question 7.
Mention a few Financial Instruments.
Answer:

  1. Financial claims
  2. Assets and
  3. Securities
  4. Debentures
  5. Deposits and Loans
  6. Corporate Stocks and Bonds
  7. Government Bonds

Question 8.
Name the types of Financial Markets.
Answer:

  1. On the Basis of Type of Financial Claim
  2. On the Basis of Maturity of Financial Claim
  3. Time of Issue of Financial Claim
  4. Time of Delivery of Financial Claim
  5. The organizational structure of the Financial Market

Question 9.
How for Financial Assets are classified under different circumstances?
Answer:
Financial Assets can be classified differently under different circumstances. One such classification is

  1. Marketable assets
  2. Non-Marketable assets

Question 10.
Explain Marketable Assets.
Answer:
Marketable assets are those which can be easily transferred from one person to another without much hindrance. Eg: Shares of Listed Companies, Government securities.

TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

Short answer questions

Question 1.
Explain about Exchange Traded Market and Over-the-Counter Market.
Answer:

  1. Exchange-Traded Market is a centralized organization (Stock Exchange) with standardized procedures.
  2. Over-the-Counter Market is a decentralized Market (outside the stock exchange) with customized procedures.

Question 2.
Differentiate Money Market from Capital Market.
Answer:
Money Market: Money Market is the market for short-term financial claims. (One year or Less). Eg: Treasury Bill, Commercial Paper, Certificates of Deposit.
Capital Market: Capital Market is the market for long-term financial claims for more than one year. Eg: Shares, Debentures.

Long answer questions

Question 1.
What are the contributions of Financial Markets in promoting the economic development of a country?
Answer:

  1. Financial Markets play a key role in arranging the investment of funds.
  2. Financial Markets provide financial assistance to individuals, agricultural sectors, industrial sectors, service sectors, and financial institutions.
  3. Institution gets their short-term as well as long-term financial assistance. It leads to overall economic development.
  4. It contributes to nations’ growth by ensuring the flow of surplus funds to deficit units.
  5. The flow of funds for productive purposes.
  6. Development of entrepreneurial class by making financial resources.
  7. Enhancing the income and the gross national production.
  8. To raise the standard of living and the society’s well-being.
  9. New savings flow to aid the capital formation of a country.

TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

Question 2.
Discuss the classification of Financial Assets.
Answer:
Financial assets can be classified differently under different circumstances.
One such classification is:

  1. Marketable Assets: Marketable assets are those which can be easily transferred from one person to another without much hindrance. Eg: Shares of Listed Companies, Government securities.
  2. Non-Marketable Assets: If the assets cannot be transferred easily, they came under this category. Eg: Bank deposits, Provident Funds, Pension Funds, Insurance Policies.

Multiple-choice questions

1. To provide goods and services to the people Government need:
(a) Funds
(b) Project
(c) Time
(d) Place
Answer:
(a) Funds

2. In what type of assistance the financial institution can get from financial market?
(a) Short term finance
(b) Long term finance
(c) Both (a) and (b)
(d) None
Answer:
(c) Both (a) and (b)

3. A market where in financial instruments are traded is known as:
(a) Bankers
(b) Money Market
(c) Insurance
(d) Financial Market
Answer:
(d) Financial Market

TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

4. Financial Market for trading in Equity Shares of companies:
(a) Money Market
(b) Equity Market
(c) Debt Market
(d) Capital Market
Answer:
(b) Equity Market

5. Sale of securities for the first time by the companies known as:
(a) Primary Market
(b) Money Market
(c) Capital Market
(d) Spot Market
Answer:
(a) Primary Market

6. In which type of Market Stock exchange is an important institution?
(a) Money Market
(b) Primary Market
(c) Secondary Market
(d) None
Answer:
(c) Secondary Market

7. In Financial Market, the transaction may take place at a:
(a) Specific place
(b) Trade
(c) Stock
(d) Contracts
Answer:
(a) Specific place

8. Market for short term financial claim known as:
(a) Debt Market
(b) Equity Market
(c) Money Market
(d) Capital Market
Answer:
(c) Money Market

TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

9. Flow many times security can be sold in a Primary Market?
(a) Only One time
(b) Two time
(c) Three-time
(d) Multiple time
Answer:
(a) Only One time

10. Market for long-term financial claim known as.
(a) Money Market
(b) Capital Market
(c) Spot Market
(d) All the above
Answer:
(b) Capital Market

11. Market for securities that are already issued. Mention Type of Market.
(a) Primary Market
(b) Secondary Market
(c) Debt Market
(d) Capital Market
Answer:
(b) Secondary Market

12. Financial Market plays a key role in arranging:
(a) Selling different instrument
(b) Financial Assets.
(c) Capital formation
(d) Investment of Funds
Answer:
(d) Investment of Funds

13. Financial Market contribute:
(a) Development of entrepreneurial class
(b) Accelerate the growth of Industry
(c) To raise the standard of living
(d) All the above.
Answer:
(d) All the above.

14. Give an example for financial Assets.
(a) Equity Shares
(b) Gold
(c) Silver
(d) Land
Answer:
(a) Equity Shares

TN Board 12th Commerce Important Questions Chapter 4 Introduction to Financial Markets

15. Building is bought for hiring it becomes a:
(a) Financial Asset
(b) Physical Asset
(c) Both (a) and (b)
(d) None
Answer:
(a) Financial Asset

16. Assets that can be easily transferred from one person to another person:
(a) Marketable Assets
(b) Non-Marketable Assets
(c) Production
(d) Consumption
Answer:
(a) Marketable Assets