Stock Exchange is a mirror indicating economic condition of the country-How?
Answer
Investors invest in share market. This way public savings gets converted as capital for industries and companies. When companies grow by using these funds the investors further invest in the market. The cycle of trade in stock exchange depicts how well or poor is country’s economy.
How does stock exchange provide liquidity element to securities?
Answer
Stock exchange ¡s a ready market in which traders $($investors$)$ can buy or sell shares as per their will. This is how stock exchange provides liquidity.
Pay-in day is the day when the brokers shall make payment or delivery of securities to the exchange. Pay-out day is the day when the exchange makes payment or delivery of securities to the broker.
Which details does the share trading, contract note contain?
Answer
The contract note contains details such as name of the security traded, quantity, total amount of transaction, order number, brokerage, taxes applicable, etc.
of purchase and sale is pre-determined. What is market order?
Answer
When an investor wants to trade at the prices existing in the market, he selects ‘market order’. Here, the buying/selling takes place at the latest quoted market price that appeared on the trading screen order was made.
The order system in which the investor sets the price at which he needs to purchase or sell the shares is called limited order. Thus, in this case, the price
Through $DEMAT$ account the investors can keep their securities safely in electronic form. This has also solved problems related to the transfer of physical shares such as fake shares, wrong deliveries, etc.
How were shares sold to the investors in the past? What was the purchaser of the share called?
Answer
In the past, when an investor wanted to invest in the shares of a company, he was given a share in the physical form $($paper$).$ This share was known as share certificate and the purchaser or the holder of the share certificate was known as share-holder.
How does stock exchange help in boosting national economy?
Answer
Investors invest in share market. This way public savings gets converted as capital for industries and companies. When companies grow by using these funds the investors further invest in the market. This boosts the overall economy.
According to K. L. Garg, “Stock exchange means a place for buying and selling industrial and financial securities like shares and debentures of a company, government securities and municipal securities.”
What is the main difference between primary market and secondary market?
Answer
In primary market, the companies issue securities for sale for the first time whereas in secondary market, the securities issued in primary market are traded over and over.
The market in which securities such as shares $($stock$),$ bonds, etc. which were originally issued in the primary market can be purchased and sold $($traded/exchanged$)$ is called secondary market.
What is capital market? Into which parts is it divided?
Answer
A capital market $($locally – share market$)$ is an organized market in which capital is raised by the investment made by general public in the form of shares, debentures, bonds, etc.
Are certificate of deposit and fixed deposit same? Why?
Answer
No. They are different. There is no minimum limit of deposit in Fo. Moreover, certificate of deposits is negotiable and can be sold whereas fixed term deposit receipt is neither negotiable nor ¡t can be sold.
A certificate of deposit $(CD)$ is a money market instrument to procure short term finance from people. $CD$ can be issued to individuals, firms, companies, etc. by scheduled commercial banks and financial institutions.
Government does not pay any interest to people who buy $T-$bills, but sells these bills at a discounted rate. Hence, $T-$bill is also called ‘zero coupon bond’.
The way central government issues $T-$bills to fulfill its financial needs, commercial papers are issued by large private corporations having very high and strong reputation as well as financial credit in the market.
A $T-$Bill $($Treasury bill$)$ is a short term financial instrument $($government security$).$ It is issued by Reserve Bank of India on behalf of Government of India to raise short term fund for the central government.
Since unorganized market is an informal market, there is neither any regulation to run it nor there is any centralized institution on it. Thus, activities in this market are carried out without any rules and regulations.
Money market refers to a section of financial market where financial instruments $($assets$)$ with high liquidity and , short-term maturities are traded.
Which type of transactions take place in financial market?
Answer
Financial transactions related to finance such as issue of equity shares by a company, purchase of shares and bonds in the secondary market, depositing money in bank account, etc.