Samacheer Kalvi 12th Commerce Solutions Chapter 7 Stock Exchange

Download Tamilnadu State Board Solutions for Class 12th Chapter 7 Stock Exchange PDF here. These Samacheer Kalvi Class 12th Chapter 7 Stock Exchange Questions and Answers will help you to improve your skills and score highest marks in the exams. Students can easily learn Chapter wise Samacheer Kalvi 12th Commerce Book Solutions Chapter 7 Stock Exchange by following the guide provided here.

Tamilnadu Samacheer Kalvi 12th Commerce Solutions Chapter 7 Stock Exchange

Students can score good marks in the exam by preparing with Samacheer Kalvi Class 12th Commerce Solutions Chapter 7 Stock Exchange Questions and Answers. Your efforts can give you good results when you have the best resources. Samacheer Kalvi Class 12th Commerce Solutions Chapter 7 Stock Exchange is the best resource to learn Commerce. Have the best learning with Chapterwise Tamilnadu State Board Class 12th Commerce Solutions to have the best future ahead.

Samacheer Kalvi 12th Commerce Stock Exchange Textbook Exercise Questions and Answers

I. Choose the Correct Answer

Question 1.
_______ is the oldest stock exchange in the world.
(a) London Stock Exchange
(b) Bombay Stock Exchange
(c) National Stock Exchange
(d) Amsterdam Stock Exchange
Answer:
(d) Amsterdam Stock Exchange

Question 2.
There are ______ stock exchanges in the country.
(a) 21
(b) 24
(c) 20
(d) 25
Answer:
(b) 24

Question 3.
Stock exchanges deal in ______
(a) Goods
(b) Services
(c) Financial Securities
(d) Country’s Currency
Answer:
(c) Financial Securities

Question 4.
Stock exchange allow trading in ______
(a) All types of Shares of any Company
(b) Bonds issued by the Govt
(c) Listed Securities
(d) Unlisted Securities
Answer:
(c) Listed Securities

Question 5.
Jobbers transact in a stock exchange
(a) For their Clients
(b) For their Own Transactions
(c) For other Brokers
(d) For other Members
Answer:
(b) For their Own Transactions

Question 6.
A pessimistic speculator is ______
(a) Stag
(b) Bear
(c) Bull
(d) Lame Duck
Answer:
(b) Bear

Question 7.
An optimistic speculator is ______
(a) Bull
(b) Bear
(c) Stag
(d) Lame Duck
Answer:
(a) Bull

Question 8.
A bull operator believes in ______
(a) Increase in Prices
(b) Decrease in Prices
(c) Stability in Prices
(d) No change in Prices
Answer:
(a) Increase in Prices

Question 9.
______ means the price at which securities are bought and sold are recorded and made public.
(a) Market Quotations
(b) Trade Quotations
(c) Business Quotations
(d) Buyers Quotations
Answer:
(a) Market Quotations

Question 10.
The rules and regulations of Stock exchange is framed by ______ guide lines.
(a) RBI
(b) Central Government
(c) SEBI
(d) BSE
Answer:
(c) SEBI

II. Very Short Answer Questions

Question 1.
What is meant by Stock Exchange?
Answer:

• Stock Exchange is one of the important constituents of the capital market.
• It is an organized market for the purchase and sale of Industrial and Financial Securities.
• It is also known as “Stock Market” or “Share Market”.

Question 2.
Define Stock Exchange.
Answer:
According to Husband and Dockery, “Stock exchanges are privately organized markets which are used to facilitate trading in securities.”

Question 3.
Write any 5 Stock Exchanges in India.
Answer:

1. Ahmedabad Stock Exchange Association Ltd.
2.  Bombay Stock Exchange.
3.  Bangalore Stock Exchange Ltd.
4.  Cochin Stock Exchange Ltd.
5.  Delhi Stock Exchange Association Ltd.

Question 4.
What is meant by Remixer?
Answer:
Remixer is an agent of a member of a stock exchange. He obtains business for his principal i.e the member.

Question 5.
Who is called a Broker?
Answer:

• Brokers are commission Agents, who act as an intermediary between Buyers and Sellers of Securities.
• They do not purchase or sell securities on their behalf.
• They bring together the buyers and sellers and help them in making a deal.

Question 6.
What are the types of Speculators?
Answer:
Speculators in a stock market are of different types. They are named on the basis of animals behaviour.
They are:

1. Bull
2. Bear
3. Stag
4. Lame-duck

Question 7.
What is meant by Commodity Exchange?
Answer:

• NSE – National Stock Exchange of India Limited.
• SHCIL – Stock Holding Corporation of India Limited.
• STCI – Securities Trading Corporation of India.
• NSDL – National Securities Depository Limited.

Question 8.
Mention the recent development in Stock Exchange.
Answer:
The structure of stock market in India has undergone a vast change with developments.
They are follows:

1. National Stock Exchange of India Limited (NSE)
2. Stock Holding Corporation of India Limited (SHCIL)
3. National Clearing and Depository System (NCDS)
4. Securities Trading Corporation of India (STCI)
5. National Securities Depository Limited (NSDL)

Question 9.
What is the stock trading time in India?
Answer:
The stock trading time in India for equity market is between 9.15 am to 3.30 am from Monday to Friday. Saturdays and Sundays were holiday.

Question 10.
Explain Dalai Street.
Answer:
Dalai Street is an area in Mumbai, where the Bombay Stock exchange is located. The literal translation of Dalai in Marathi is a broker or intermediary.

III. Short Answer Questions

Question 1.
What are the limitations of Stock exchange?
Answer:

1. Lack of uniformity and control of stock exchanges.
2. Absence of restriction on the membership of stock exchanges.
3. Failure to control unhealthy speculation.

Question 2.
Explain Bull and Bear.
Answer:
Bull: [Tejiwala]

• He is an optimistic speculator.
• He expects a rise in the price.
• In anticipation of price rise, he buys the shares at present and the intention to sell at a higher price in the future.

Bear: [Mandiwala]

•  He is a pessimistic speculator.
•  He expects a fall in the price.
•  In anticipation of price fall he sells the shares at present and buy the shares at lower price in future.

Question 3.
Explain Stag and Lame Duck.
Answer:

1. Stag: A stag is a cautious speculator in the stock exchange. He applies for shares in new companies and expects to sell them at a premium.
2. Lame Duck: When a bear finds it difficult to fulfill his commitment, he is said to be struggling like a lame duck.

Question 4.
Explain National Stock Market System. (NSMS)
Answer:
NSMS was advocated by the High powered group on the Establishment of New Stock Exchanges headed by M.J. Pherwani.
At present, NSMS comprises the following

• National Stock Exchange of India Limited – NSE
• Stock Holding Corporation of India Limited – SHCIL
• Securities Trading Corporation of India – STCI
• National Clearing and Depository System – NCDS
• National Securities Depository Limited – NSDL

Question 5.
Explain National Stock Exchange. (NSE)
Answer:
National Stock Exchange was incorporated in November, 1992. It uses satellite link to spread trading throughout the country. Through computer network, members’ orders for buying and selling within prescribed price are matched by central computer.

IV. Long Answer Questions

Question 1.
Explain the functions of the Stock Exchange.
Answer:
1. Ready and Continuous Market

• Stock Exchange is, in fact, a market for existing securities.
• If an investor wants to sell his securities, he can easily and quickly dispose them off on a stock exchange.
• In other words, he can convert his shares into cash and with the same ease, he can convert his cash into securities.
• This easy marketability of securities increases their liquidity (conversion of securities into cash easily and quickly) and consequently raises their value.

2. Correct Evaluation of Securities

• The prices at which securities are bought and sold are recorded and made public.
• These prices are called “market quotations”.
• One can easily evaluate the worth of one’s securities on the basis of these quotations.
• The lender can easily assess the worth of security offered for a loan.

3. Protection to Investors

• All dealings in the stock exchange are in accordance with well-defined rules and regulations.
• For example, brokers cannot charge a higher rate of commission for their services.
• Any malpractice will be severely punished.
• Thus stock exchange provides a reasonable measure of safety and fair dealing in buying and selling of securities.

4. Proper Chanalisation of Capital

• People like to invest in the shares of such companies which yield good profits.
• The savings of individuals are directed towards promising companies which declare good dividends over a period of time.
• But for the stock exchanges, these savings are likely to be wasted on the shares of unprofitable units.

5. Aid to Capital Formation

• The publicity which the stock exchange gives to various industrial securities and their prices and the facilities provided by it for their purchase and sale induce people to save and invest.
• Stock exchanges thus ensure a steady flow of capital into industry and assist industrial development.

Question 2.
Explain the features of the Stock Exchange.
Answer:
There are various features of a stock exchange. They are given below:

1. Market for Securities: Stock exchange is a market, where securities of corporate bodies, government companies are bought and sold.
2. Deals in Second Hand Securities: It deals with shares, debentures bonds and securities already issued by the companies.
3. Regulates Trade in Securities: Stock exchange does not buy or sell any securities on its own account. It regulates the trade activities so as to ensure free and fair trade.
4. Allows Dealings only in Listed Securities: In the stock exchange only listed securities are purchased and sold. Unlisted securities cannot be traded in the stock exchange.
5. Association of Persons: A stock exchange is an association of persons or body of individuals which may be registered or unregistered.

Question 3.
Explain the Benefits of Stock Exchange.
Answer:
1. Benefits to Community IETCI

• Economic Development – accelerates economic development by ensuring steady flow of savings into productive purposes.
• Tools o divert resources – Scarce resources are ‘thus diverted to efficiently run enterprises for better utilization. Capital formation-It encourages capital formation.

2. Benefits to the Company LWEBI

• Wide market – There is a wide and ready market for such securities.
• Entrance Goodwill – Companies whose shares are quoted on a stock exchange enjoy greater goodwill and reputation.
• Bargaining Strength – Companies whose shares rise m the stock exchange

Question 4.
Distinguish between Stock Exchange and Commodity Exchange.
Answer:

Question 5.
Explain Lombard Street and Wall Street.
Answer:
Lombard Street: Lombard Street is in London. It is a street notable for its connections with the merchants, banking, and insurance industries of London. From bank junction, where nine streets converge by the bank of England, Lombard Street runs southeast for a short distance.

Wall Street: Wall Street is a street in New York. It is the original home of the New York Stock exchange. Also, it is the historic headquarters of the largest U.S. brokerages and investment banks.

Wall Street is also used as a collective name for the financial and investment community.

Samacheer Kalvi 12th Commerce Stock Exchange Additional Questions and Answers

I. Choose the Correct Answer

Question 1.
Match List I with List II and select the correct answer using the codes given below:

Codes:

Answer:
(b) 2, 4, 1, 3

Question 2.
……………Speculator is also known as “Premium Hunter”
a) Stag
b) Lame Duck
c) Bull
d) Bear
Answer:
a) Stag

Case Study

Ramesh and Asaladeepesh are good friends. Ramesh is a very god-fearing kind, while Asaladeepesh was an enterprising person, having a practical approach. Read the ” following conversation.

Ramesh: Hi, Deepesh! What are you doing?
Asaladeepesh: Hi, I am reading the newspaper – financial market page that gives us
information about the shares price.
Ramesh: Shares, that is an area of big gambles.
Asaladeepesh: No, not really! You must understand how it works.
Ramesh: Frankly speaking, I think this Capital market is all a gambling game and I don’t see any use of them.
Asaladeepesh: No, you are seriously mistaken; you do not know the importance of the capital market. I will tell how it is needed for an individual and an economy.

You are required to play the role of Asaladeepesh and continue the conversation.
Solution:
Ramesh: Ok, you tell me the importance of capital.
Asaladeepesh: Capital is needed for an individual to commence business. Also, it is needed to develop society.
Ramesh: What is capital?
Asaladeepesh: Capital is the finance needed to do the business.
Ramesh: How the capital can be obtained?
Asaladeepesh: Capital may be introduced by self or for a large amount of capital one can issue shares and debentures.
Ramesh: What is meant by share?
Asaladeepesh: Share means a unit or a part of share capital.
Ramesh: What is the income for the shares purchased?
Asaladeepesh: For purchasing shares, the company can declare dividends from the profit earned by the company.
Ramesh: What are the types of shares?
Asaladeepesh: The shares may be of equity shares and preference shares.
Ramesh: What is meant by debentures?
Asaladeepesh: Debenture may be a document for accepting loans from the public.
Ramesh: How the shares can be obtained, if not purchased from the original issue?
Asaladeepesh: You can get the shares from the stock exchange by contacting a broker.

We hope the information prevailed in this article is helpful for all the students of Class 12th. The Tamilnadu State Board Solutions for Class 12th Chapter 7 Stock Exchange Questions and Answers And Pdf enhance your skills and score good marks in the exams. Stay tuned to get the latest information about the Samacheer Kalvi Class 12th Chapter 7 Stock Exchange Solutions.