12th Commerce Chapter 4 Assignment Answer Key - July 2021
12th Commerce unit 2 Assignment Answer Key - Chapter 4 English Medium and Tamil Medium
Unit - 2
Chapter - 4 Introduction to Financial Markets Assignment Answer
Part - A
I.One Mark Questions
1. Financial market facilitates business firms ----------
a) To rise funds
b) To recruit workers
c) To make more sales
d) To minimize fund requirement
2.Capital market is a market for -------
a) Short Term Finance
b) Medium Term finance
c) Long Term Finance
d) Both short Term and Medium Term finance
3. Primary market is also called as-------
a) Secondary market
b) Money market
c) New Issue Market
d) Indirect Market
4. Spot Market is a market where the delivery of the financial instrument and payment of cash occurs---------
a) Immediately
b) In the future
c) Uncertain
d) After one month
5.How many times a security can be sold in the secondary market-------
a) Only one time
b) Two time
c) Three times
d) Multiple times
6. Short term financial market is called------------
a) Money market
b capital market
c) Debt market
d Equity Market
7. Which market called NIM Ma ------
a) Secondary Market
b Primary Market
c) Capital market
d) Money Market
8. A Market where the delivery of the financial instrument and payment of cash occurs immediately --------
a) Forward Market
b) Spot market
c) Primary Market
d) secondary market
9. A Market for securities that are already sold ------
a) Primary Market
b) Secondary Market
c) capital market
d) Money Market
10. A Market for trading in Debt Instrument----------
a) Equity market
b) Debt Market
c) Primary Market
d) Secondary Market
II.Very Short Answer.
11. What are the components of organized sectors?
- Regulators
- Financial Institutions
- Financial Markets.
- Financial Services
12. Write a note on Financial Market.
- A financial market is an institution or arrangement that facilitates the exchange of financial instruments such as equity shares, preference shares, debentures, deposits and loans, corporate stocks and bonds, government bonds, and more exotic instruments such as options and futures contracts.
13. What is Spot Market?
- Spot market is otherwise called cash market. it is a market where the delivery of the financial instrument and payment of cash occurs immediately, i.e. settlement is completed immediately.
14. What is Debt Market?
- Debt Market is the financial market for trading in Debt Instrument (i.e. Government Bonds or Securities, Corporate Debentures or Bonds.
15. Give the meaning for the term Marketable Assets.
- Marketable Assets: Marketable assets are those which can be easily transferred from one person to another without much hindrance. Example: Shares of Listed Companies, Government Securities, Bonds of Public Sector Undertakings etc.
Part – C
III. Short Answer.
16. Give the meaning and definition of Financial Market.
- Meaning: A market wherein financial instruments such as financial claims, assets and securities are traded is known as a‘financial market’.
- Definition: According to Brigham, Eugene F, “The place where people and organizations wanting to borrow money are-brought together with those having surplus funds is called a . financial market.”
17. Differentiate Spot Market from Future Market.
Spot Market:
- Spot market is otherwise called cash market. it is a market where the delivery of the financial instrument and payment of cash occurs immediately, i.e. settlement is completed immediately.
Future Market:
- Future market is otherwise called forward market. It is a market where the delivery of asset and payment of cash takes place at a predetermined time frame in future.
18. Write a note on Secondary Market.
- Secondary Market is the market for securities that are already issued. Stock Exchange is an important institution in the secondary market.
19. Bring out the scope of Financial Market in India.
- The financial market provides financial assistance to individuals, agricultural sectors, industrial sectors, service sectors, financial institutions like banks, insurance sectors, provident funds and the government as a whole. With the help of the financial market all the above stated individuals, institutions and the Government can get their required funds in time. Through the financial market the institutions get their short term as well as long term financial assistance. It leads to the overall economic development.
20. Write any 3 functions of Financial Market.
- Transfer of Resources: Financial markets facilitate the transfer of real economic resource from lenders to ultimate borrowers.
- Enhancing Income: Financial markets allow lenders earn interest/dividend on their surplus investible funds and thus contributing to the enhancement of the individual and the national income.
- Productive Usage: Financial markets allow for the productive use of the funds borrowed and thus enhancing the income and the gross national production.
P rt – D
IV.Write in deta .
21. Distinguish between new issue market and secondary market
Answer:
| Basis For Comparison | New Issue Market | Secondary Market |
| Meaning | The market place for new shares is called primary market. (Initial Issues Market) | The place where formerly issued securities are traded is known as Secondary Market. (Resale Market) |
| Buying | Direct | Indirect |
| Financing | It supplies funds to budding enterprises and also to existing companies for expansion and diversification. | It does not provide funding to companies. |
| How can securities be sold? | Only once | Multiple times |
| Buying and Selling between | Company and Investors | Investors |
| Gained person | Company | Investors |
| Intermediary | Underwriters | Brokers |
| Price | Fixed price | Fluctuates, depends on the demand and supply force. |
| Organizational difference | Not rooted to any specific spot or geographical location. | It has physical existence. |
22.Enumerate the different kinds of Financial Markets.
Financial assets can be classified differently under different circumstances. One such classification is:
- Marketable assets
- Non-marketable assets
- Marketable Assets: Marketable assets are those which can be easily transferred from one person to another without much hindrance. Example: Shares of Listed Companies, Government Securities, Bonds of Public Sector Undertakings etc.
- Non-Marketable Assets: On the other hand, if the assets cannot be transferred easily, they come under this category. Example: Bank Deposits, Provident Funds, Pension Funds, National Savings Certificates, Insurance Policies etc.