Business Studies Worksheet Chapter 10 Financial Market

1. Define financial market. 

2. In India, there are two depositories. Name them. 

3. List the steps involved in trading procedure in a stock exchange. 

4. Fill in the blanks:

1. Treasury bills are available for a minimum amount of Rs _______ and in multiples thereof.

2. Financial market can be classified into two types: a. _______ market and b. _______ market. 

3. The Capital Market can be divided into two parts: a. _______ Market and b. ______ Market.

4. _______ market is also known as stock exchange. 

5. The SEBI was given a statutory status on 30 January ______(year) through an ordinance.

6. The process of holding securities in an electronic form is called _________.

7. ___________ is the document prepared in the process of online trading of securities that is legally enforceable and helps to settle disputes/claims between the investor and the broker.

5. Identify the function of financial market highlighted in each of the following sentences:

1. Holders of assets can readily sell their financial assets through the mechanism of the financial market.

2. A financial market facilitates the transfer of savings from savers to investors.

3. Financial markets provide valuable information about securities being traded in the market

6. State the differences between capital and money market on the basis of:

1. Duration

2. Return

3. Safety

4. Instruments

5. Liquidity 

6. Investment outlay 

7. State the differences between primary and secondary market on the basis of:

1. Meaning

2. Parties involved

3. Determination of price

4. Geographical location

8. Identify the method of floatation mentioned in each of the following cases:

1. The existing shareholders are offered the ‘right’ to buy new shares in proportion to the number of shares they already possess.

2. It involves allotment of securities by a company to institutional investors and some selected individuals.

3. It involves issue of capital to the public through the on-line system of the stock exchange. 

4. This involves inviting subscription from the public through issue of prospectus.

5. Under this method, securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers.

9. Identify the money market instrument mentioned in each of the following cases:

1. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high.

2. It is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.

3. It is issued by large and creditworthy companies to raise short-term funds at lower rates of interest than market rates.

4. It is issued by the Reserve Bank of India on behalf of the Central Government to meet its short-term requirement of funds. 

5. It is used for inter-bank transactions.

6. They are also known as Zero Coupon Bonds. 

7. The purpose of this instrument was to provide short-terms funds for seasonal and working capital needs.

8. This instrument is used by banks to maintain CRR.

9. This instrument is used for bridge financing. 

10. Identify the main function performed by SEBI in the following cases:

1. Promotion of fair practices.

2. Training of intermediaries of the securities market.

3. Registration of brokers.

4. Controlling insider trading.

5. Conducting enquiries and audits of stock exchanges and intermediaries.

6. Conducting research and publishing information useful to all market participants.