Students get through the TN Board 12th Commerce Important Questions Chapter 7 Stock Exchange which is useful for their exam preparation.
TN State Board 12th Commerce Important Questions Chapter 7 Stock Exchange
Very short answer questions
Question 1.
Write down the origin of the stock exchange.
Answer:
- Amsterdam stock exchange is considered the oldest stock exchange in the world.
- It was established in the year 1602 by a Dutch East India Company called Verenigde Oost – Indische campaign called “VOC”.
- It was later rechristened as “Amsterdam bourse”.
Question 2.
Write about the first stock exchange in India.
Answer:
- The first stock exchange in India was “The Native Shares and Stock Brokers Association”.
- It was recognized by the Government of India on August 31, 1957, Under the Securities Contract (regulations) act 1956.
- It became the Bombay Stock Exchange.
Question 3.
Write any five stock exchanges in the world.
Answer:
- The New York stock exchange
- London Stock Exchange
- Tokyo Stock Exchange
- Euronext
- Bombay Stock Exchange
Question 4.
What is meant by speculation?
Answer:
- Speculations involve trading a financial instrument involving high risk, in expectation of significant returns.
- The motive is to take maximum advantage of fluctuations in the market.
- Speculators are prevalent in the markets where price movements of securities are highly frequent and volatile.
Question 5.
Who is called Jobbers?
Answer:
- Jobbers are security merchants dealing in shares, debentures as independent operators.
- They buy and sell securities on their own behalf and try to earn through price changes.
- Jobbers cannot deal on behalf of the public and are barred from taking a commission.
- In India, they are called Taravaniwalas.
Question 6.
Who are all participants in the stock exchange market?
Answer:
- Investors
- Speculators
Question 7.
List out the securities that are traded in stock exchanges.
Answer:
- Shares and debentures issued by public companies.
- Bonds and debentures issued by Government, public corporation, and municipal and port trust bodies.
Question 8.
Explain about authorized clerks.
Answer:
- The authorized clerks are mere employees of the members, appointed by members of the stock exchange.
- The authorized clerks transact business on behalf of their employers on the floor of the stock exchange.
- They are paid a salary plus commission.
Question 9.
How to protect the investors in the stock exchange?
Answer:
The stock exchange safeguards, investors interest and ensure fair dealing by strictly enforcing in rules and regulations.
Question 10.
In what way the transactions take place in stock exchanges?
Answer:
The transactions are in securities at the stock exchange are effected only through its authorized brokers and members. Investors have to buy or sell securities at the stock exchange through the authorized brokers only.
Short answer questions
Question 1.
Discuss stock exchanges in India.
Answer:
- There are 24 stock exchanges in the country.
- With 21 of them being regional in nature.
- Three others have been set up in the reforms era.
- NSE, OTCEI, and ISE have a mandate to nationwide trading networks.
- The ISE has been promoted by 15 regional stock exchanges in the country and is based in Mumbai.
- The majority of the regional stock exchanges have adopted the Screen-Based Trading System (SBTS) to provide automated and modem facilities for trading.
Question 2.
Explain about few (top ten ) stock exchanges in the world.
Answer:
- The New York Stock Exchange: Located in New York city $ 19.223 trillion in listed market capitalization.
- London Stock Exchange: Located in London, England $6,187 trillion
in listed market capitalization. - Bombay Stock Exchange: Located in Mumbai, India $1,682 trillion in market capitalization.
- Euronext: Located throughout Europe (France, Portugal, Netherlands, and Belgium) $3,321 trillion in listed market capitalization.
Question 3.
Explain National Clearance and Depository System (NCDS).
Answer:
- This system was created chiefly to help overcome the problem of settlement and clearance of transactions consequent to the enormous workload on the clearing agencies and share transfer agencies.
- The problems mainly arose out of systematic risks like counterparty risk, credit risk, bad deliveries, long-delayed delivery, counterfeit scripts, and forged scripts.
Question 4.
Explain about National Securities Depository Limited (NSDL).
Answer:
- The Government of India enacted the depositories act in August 1996, paving the way for the setting up depositories in India.
- NSDL was inaugurated as the first depository in India on November 8, 1996.
- Trading in dematerialized securities on the National Stock Exchange (NSE) commenced in December 26, 1996.
- The Bombay stock exchange also extended the facility of trading in dematerialized securities from December 29, 1997.
Long answer questions
Question 1.
Explain nifty and sensex.
Answer:
Nifty:
- The word Nifty originates from 2 words, “National” and “fifty”.
- Nifty basically means the index of the 50 most actively traded stocks from across all sectors.
- Nifty represents the top stocks of the NSE and when we talk about nifty going up, it means that all the heavyweight stock of NSE across all sectors are moving up.
- Nifty is computed from the performance of top stocks from different sectors.
- Nifty is calculated by using the market capitalization-weighted method according to which weights assigned according to the size of the company.
- Larger the size, the larger the weightage.
Sensex:
- Sensex is an index of the stocks in BSE.
- Sensex has a list of 30 stocks.
- BSE decides the stocks that are to be listed in Sensex.
- The criteria for picking a stock to be listed on Sensex are the volume of the trade of that stock and the total volume of the stock in BSE.
- BSE regularly prepares a set of 30 stocks which will be together called Sensex.
- BTW Sensex means sensitive index now each stock is allotted a weightage according to criteria.
- BSE each day stocks are traded and the price of stocks is determined according to demand and supply.
Multiple-choice questions
1. ………. contribute the growth and expansion of national business and national economy and its people.
(a) stock exchange
(b) financial assets
(c) commodity exchange
(d) capital formation
Answer:
(a) stock exchange
2. When was the first stock exchange in India established?
(a) 1949
(b) 1947
(c) 1957
(d) 1955
Answer:
(c) 1957
3. Stock exchange is also called:
(a) share market
(b) bond
(c) debentures
(d) none
Answer:
(a) share market
4. Which is the oldest stock exchange in India?
(a) The Madras Stock Exchange Limited.
(b) Bombay Stock Exchange
(c) Bangalore Stock Exchange
(d) The National Stock Exchange
Answer:
(b) Bombay Stock Exchange
5. Which is the most popular stock exchange in the world?
(a) The New York Stock Exchange
(b) Tokyo Stock Exchange
(c) London Stock Exchange
(d) Euronext
Answer:
(c) London Stock Exchange
6. In which year the Indian securities contracts (Regulation act) was passed by the Government of India?
(a) 1953
(b) 1949
(c) 1952
(d) 1956
Answer:
(d) 1956
7. Which is an integral part of stock exchange operations?
(a) Clearinghouse
(b) Speculations
(c) Trade
(d) None
Answer:
(b) Speculations
8. In what way the public get information for deciding on investments?
(a) Books
(b) Financial statement
(c) Annual reports
(d) All the above
Answer:
(d) All the above
9. How the transactions in securities at the stock exchange?
(a) Brokers
(b) Clerks
(c) Outsiders
(d) Trading circle
Answer:
(a) Brokers
10. The working of stock exchange is conducted and controlled through:
(a) Computers
(b) Electronic systems
(c) Both (a) and (b)
(d) None
Answer:
(c) Both (a) and (b)
11. Stock exchange can raise huge funds by issue of:
(a) Shares
(b) debentures
(c) bonds
(d) All the above
Answer:
(d) All the above
12. How many stocks exchange markets are in India?
(a) 21
(b) 24
(c) 20
(d) 22
Answer:
(b) 24
13. How many regional stock exchanges in the country based at Mumbai?
(a) 12
(b) 10
(c) 14
(d) 15
Answer:
(d) 15
14. Regional stock exchanges have adopted to provide modern facilities for trading in transparent manner.
(a) SBTS (Screen Based Trading System)
(b) trading network
(c) National Market Local Trading
(d) none
Answer:
(a) SBTS (Screen Based Trading System)
15. How many Top Stock Exchanges are in the world?
(a) 5
(b) 1
(c) 10
(d) 12.
Answer:
(c) 10
16. Who is a commission agent and acts as intermediaries between buyers and sellers of securities?
(a) Jobbers
(b) Brokers
(c) speculators
(d) traders
Answer:
(a) Jobbers
17. Who is an operator and expects arise in prices of securities in the future?
(a) A bull
(b) bear
(c) both (a) and (b)
(d) Lame duck.
Answer:
(a) A bull
18. A bear or Mandiwala speculator expects prices too in the future and sell securities at present.
(a) Rise
(b) fall
(c) constant
(d) none
Answer:
(b) fall
19. Who is also called a premium hunter?
(a) A stag
(b) lame duck
(c) both (a) and (b)
(d) a bear
Answer:
(a) A stag
20. Find out the participants of the stock exchange market.
(a) Investors
(b) speculators
(c) both (a) and (b)
(d) traders
Answer:
(c) both (a) and (b)
21. In which market speculations ensure assumption and absorption of price risk?
(a) Stock exchange
(b) Security market
(c) Commodity exchange
(d) All the above
Answer:
(c) Commodity exchange
22. Which is the first depository participant registered with SEBI:
(a) SHCIL
(b) NCDS
(c) STCI
(d) NSE
Answer:
(a) SHCIL
23. When was NSE incorporated and a country, wide screen-based trading system?
(a) 1992
(b) 1990
(c) 1989
(d) 1985
Answer:
(a) 1992
24. Mention the authorized and paid-up capital of STCI finance limited.
(a) Rs. 1000 crores
(b) Rs. 1050 crores
(c) Rs. 250 crores
(d) Rs. 500 crores
Answer:
(d) Rs. 500 crores
25. What about the contribution of RBI in the paid-up capital of STCI?
(a) 50.12%
(b) 50.10%
(c) 50.18%
(d) 50.20%
Answer:
(c) 50.18%
26. In which criteria each stock is allowed in Sensex?
(a) weightage
(b) price
(c) market
(d) capital
Answer:
(a) weightage
27. The price of stocks is determined in BSE based on?
(a) demand
(b) supply
(c) both (a) and (b)
(d) none
Answer:
(c) both (a) and (b)
28. What is the time for the trading equity market?
(a) 9.15 am to 3.30 pm
(b) 8.40 am to 3.00 pm
(c) 9.00 am to 2.45 pm
(d) 8.30 am to 2.30 pm
Answer:
(a) 9.15 am to 3.30 pm
29. Which is the original home of the New York stock exchange?
(a) Dalai street
(b) wall street
(c) Lombard street
(d) none
Answer:
(b) wall street
30. An options market the right to sell a security is called a:
(a) put option
(b) call option
(c) outright
(d) reputable
Answer:
(a) put option