Download App

Financial Market — Business Studies STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceBusiness StudiesFinancial Market6 Marks
Question
Explain any four functions of ‘Financial market’.
✓

Answer

Functions of finance market:
  1. Mobilisation of Savings and Channeling them into the most Productive Uses: A financial market facilitates the transfer of savings from savers to investors. It gives savers the choice of different investments and thus helps to channelise surplus funds into the most productive use.
  2. Facilitate Price Discovery: You all know that the forces of demand and supply help to establish a price for a commodity or service in the market. In the financial market, the households are suppliers of funds and business firms represent the demand. The interaction between them helps to establish a price for the financial asset which is being traded in that particular market.
  3. Provide Liquidity to Financial Assets: Financial markets facilitate easy purchase and sale of financial assets. In doing so they provide liquidity to financial assets, so that they can be easily converted into cash whenever required.
  4. Reduce the Cost of Transactions: Financial markets provide valuable information about securities being traded in the market. It helps to save time, effort and money that both buyers and sellers of a financial asset would have to otherwise spend to try and find each other.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "6 Marks Question" from Financial Market→Financial Market — all question types→Business Studies STD 12 Commerce question papers→CBSE Board STD 12 Commerce question papers→CBSE Board question paper generator→

Similar questions

'Determining the relative proportion of various types of funds depends upon various factors.' Explain any five such factors.
→
What is meant by "Divisional structure" of an organisation? For which type of business enterprise is this structure most suitable? State any four advantages of this form of organisational structure.
→
With the help of any four points, explain the importance of ‘Decentralisation’ in an organisation.
→
Explain the concept of Democratic leadership and state its features.
→
‘Controlling is a systematic process involving a series of steps'. Explain.
→
“Management is a science like physics or chemistry.” Do you agree with this statement? Give reasons in support of your answer.
→
Every manager has to take three major decisions while performing the finance function. Explain them.
→
Explain the following principles of management:
  1. Scalar Chain.
  2. Harmony, not discord.
→
Dheeraj is working as 'Operations Manager' in Tifco Ltd. Name the managerial level at which he is working. State any four functions he will perform as 'Operations Manager' in this company.
→
Sakshi Ltd. is a company manufacturing electronic goods. It has a share capital of ₹ 120 lakhs. The earning per share in the previous year was ₹ 0.5. For diversification, the company requires additional capital of ₹ 80 lakhs. The company raised funds by issuing 10% debentures for the same. During the current year the company earned profit of ₹ 16 lakhs on capital employed. It paid tax @ 40%.
  1. State whether the shareholders gained or lost in respect of earning per share on diversification. Show your calculations clearly.
  2. Also state any three factors that favour the issue of debentures by the company as part of its capital structure.
→