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Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Notes PDF Download: Tamil Nadu STD 12th Commerce Chapter 5 Capital Market Notes

Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Notes PDF Download: Tamil Nadu STD 12th Commerce Chapter 5 Capital Market Notes
Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Notes PDF Download: Tamil Nadu STD 12th Commerce Chapter 5 Capital Market Notes


Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Notes PDF Download: Students of class can download the Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Notes PDF Download from our website. We have uploaded the Samacheer Kalvi 12th Commerce Chapter 5 Capital Market notes according to the latest chapters present in the syllabus. Download Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Chapter Wise Notes PDF from the links provided in this article.


Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Notes PDF Download

We bring to you specially curated Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Notes PDF which have been prepared by our subject experts after carefully following the trend of the exam in the last few years. The notes will not only serve for revision purposes, but also will have several cuts and easy methods to go about a difficult problem.


Board

Tamilnadu Board

Study Material

Notes

Class

Samacheer Kalvi 12th Commerce

Subject

12th Commerce

Chapter

Chapter 5 Capital Market

Format

PDF

Provider

Samacheer Kalvi Books


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Download Samacheer Kalvi 12th Commerce Chapter 5 Capital Market Chapterwise Notes PDF

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Question 1.
Capital market do not provide
a) Short term Funds
b) Debenture Funds
c) Equity Funds
d) Long term Funds
Answer:
a) Short term Funds

Question 2.
When the NSEI was established
a) 1990
b) 1992
c) 1998
d) 1997
Answer:
b) 1992

Question 3.
Primary market is a Market where securities are traded in the
a) First Time
b) Second Time
c) Three Time
d) Several Times
Answer:
a) First Time

Question 4.
Participants in the capital market includes
a) Individuals
b) Corporate
c) Financial Institutions
d) All of the above
Answer:
d) All of the above

II. Very Short Answer Questions.

Question 1.
What is Capital Market?
Answer:

  • “Capital Market” is a market where buyers and sellers engage in the trade of financial securities (Long Term) like Bonds and Stocks.
  • It is undertaken by participants such as Individuals and Institutions.

Question 2.
Write a note on OTCEI.
Answer:

  • The OTCEI was set up by financial institutions [IDBI, IFCI, SBI, (can Bank), etc.,] to allow the trading of securities across the electronic counters throughout the country.
  • Its greatest strengths are transparency of transactions, Quick deals, faster settlements, and better liquidity.

Question 3.
What is Mutual Fund?
Answer:
Financial institutions that provide facilities for channeling savings of Small investors into avenues of productive investments are called ‘Mutual Funds’. A mutual fund company invests the funds pooled from shareholders and gives them the benefit of a diversified investment portfolio and a reasonable return.

Question 4.
Who are the participants in a Capital Market?
Answer:
The participants of the Capital Market are Individuals and Institutions such as the corporate sector, Government, and other financial institutions [Banks]

Question 5.
How is price determined in a Capital Market?
Answer :
The price of the securities is determined based on the demand and supply prevailing in the capital market for securities.

III. Short Answer Questions

Question 1.
What are the various kinds of Capital Market? Explain.
Answer:
Primary Market:

  • Primary Market is a market for new issues or new financial claims.
  • Hence it is also called New Issues Market (NIM)
  • It deals with those securities which are issued to the public for the first time.

Secondary Market:

  • It may be defined as the market for old (second hand) securities, in the sense that securities which are previously issued in the primary market are traded here.
  • It covers both the stock Exchange and the counter market.

Question 2.
Explain any two functions of the Capital Market.
Answer :
Ready and Continuous Market: The stock Exchange provides a central and convenient place where Buyers and Sellers can easily Buy and Sell securities.

A reliable guide to performance: The capital market serves as a reliable guide to the performance and financial position of corporate and thereby promotes efficiency.

Question 3.
Write a note on National Clearance and Depository System (NCDS).
Answer:
Under the scriptless trading system, settlement of transactions relating to securities takes place through a book entry. The entire scripless trading system comprises the following three segments:

  1. National Trade Comparison and Reporting System which prescribes the terms and conditions of contract for the securities market.
  2. National Clearing System which aims at determining the net cash and stock liability of each broker on settlement date.
  3. National Depository System which arranges to provide for the transfer of ownership of securities in exchange on payment by book-entry on electronic ledgers without any physical movement of the transfer deed.

Question 4.
Discuss evolution and growth of Indian Capital Market.
Answer :

  • The period between 1947 and 1973 marked the development of infrastructure for the capital market.
  • During this period Financial institutions such as IFCI, ICICI, IDBI, and UTI, SFCs, and SIDCs were established.
  • These institutions strengthened the capital market.
  • During the period between 1980 and 1992, debenture emerged as a powerful instrument of resource mobilisation in the primary market.
  • A number of Stock Exchanges came into existence.
  • There was tremendous growth in the secondary market.
  • SEBI emerged as an effective regulatory body for the primary and secondary markets and give a measure of protection to small investors.
  • New financial services such as credit rating were introduced.

Question 5.
Explain about Factoring and Venture Capital Institutions.
Answer:
“Factoring” is an arrangement whereby a financial institution provides financial accommodation on the basis of assignment/sale of account receivables. The factoring institutions collect the book debts for and on behalf of its clients. Some of the factoring institutions operating in India are SBI Factors and Commercial Services Private Limited, a subsidiary of State Bank of India and Canbank Factors Limited, a subsidiary of Canara Bank.

Venture capital financing is a form of equity financing designed especially for funding new and innovative project ideas. Venture capital funds bring into force the hi-technology projects which are converted into commercial production.

IV. Long Answer Questions:

Question 1.
Discuss the characters of a Capital Market. (PM) (SPL)
Answer :
Price : The price of the securities is determined based on the demand and supply prevailing in the capital market for securities.

Market for Financial Assets : Capital Market provides a transaction platform for long term financial assets.

Securities Market : The dealings in a capital market done through shares, Debentures etc. [Securities]
The capital market is thus called securities market.

Participants : The participants of capital market include individuals, corporate sectors, government, banks and other financial institutions.

Location : Capital Market is not confined to certain specific locations, although it is true that parts of the market are concentrated in certain well-known centres known as Stock Exchange.

Question 2.
Briefly explain the functions of capital market. FIRES
Answer:

  1. Savings and Capital Formation: In capital market, various types of securities help to mobilize savings from various sectors of the population (Individuals, Corporate, Govt., etc.). The twin features of reasonable return and liquidity in stock exchange are definite incentives to the people to invest in securities. This accelerates the capital formation in the country.
  2. Permanent Capital: The existence of a capital market/stock exchange enables companies to raise permanent capital. The investors cannot commit their funds for a permanent period but companies require funds permanently.
  3. Industrial Growth: The stock exchange is a central market through which resources are transferred to the industrial sector of the economy.
  4. Beady and Continuous Market: The stock exchange provides a central convenient place where buyers and sellers can easily purchase and sell securities.
  5. Reliable Guide to Performance: The capital market serves as a reliable guide to the
    performance and financial position of corporate, and thereby promotes efficiency.
  6. Proper Channelization of Funds: The prevailing market price of a security and relative yield are the guiding factors for the people to channelize their funds in a particular company.
  7. Provision of Variety of Services: The financial institutions functioning in the capital market provide a variety of services such as grant of long term and medium-term loans to entrepreneurs.
  8. Development of Backward Areas: Capital Markets provide funds for projects in backward areas. This facilitates economic development of backward areas.
  9. Foreign Capital: Capital markets make it possible to generate foreign capital. Indian firms are able to generate capital funds from overseas markets by way of bonds and other securities.
  10. Easy Liquidity: With the help of the secondary market investors can sell off their holdings and convert them into liquid cash.

Question 3.
Explain the various types of New Financial Institutions. (SON) (VN)
Answer :
Stock Holding Corporation of India Limited [SHCIL]

  • SHCI, aims at serving as a central securities depository in of transactions on Stock exchange.
  • It also takes up the administration clearing functions at a national level.

Over The Counter Exchange of India [OTCEI]

  • The OTCEI was set up by financial institutions [IDBI, IFCI, SBI (can Bank) etc.,] to allow the trading of securities across the electronic counters throughout the country

National Securities Depositories Limited |NSDL]

  • The NSDI. was set up in the year 19% tor achieving a time-bound dematerlization as well as rematerialization of shares.
  • The NSDI is expected to alleviate the problems of post-trade transactions in the secondary market.

Venture Capital Institution [VCI]

  • Venture Capital financing is a form of equity financing designed especially for funding new and innovative project ideas.
  • Venture capital Funds bring into force the Mi-Technology projects which are converted into commercial production.

National Stock Exchange of India [NSEI]

  • NSEI was established in 1942 to functions as a model stock exchange.
  • The Aim of NSEI providing the advantage of a nationwide electronic screen-based “Scripless” and “floorless” trading system in securities.

12th Commerce Guide Capital Market Additional Important Questions and Answers

I. Choose the correct answer.

Question 1.
The term _________ market refers to the facilities and institutional arrangement through long-term funds.
(a) Capital
(b) Asset
(c) Buyers
(d) Sellers
Answer:
(a) Capital

Question 2.
Channeling savings of small investors into productive investment is called
a) Mutual Fund
b) Bond
c) Equity
d) Stocks
Answer :
a) Mutual Fund

Question 3.
How to determine the price of the securities in the capital market
a) Investment
b) Savings
c) Deposits
d) Demand and Supply
Answer :
d) Demand and Supply

Question 4.
NSEI was established in
(a) 1992
(b) 1991
(c) 1994
(d) 1995
Answer:
(a) 1992

Question 5.
Primary Market facilitates…………………….
a) Capital formation
b) Trade
c ) Funds
d) Securities
Answer :
a) Capital formation

Question 6.
The primary market is also called as
(a) Secondary market
(b) Commodity market
(c) Mutual funds
(d) New issues market
Answer:
(d) New issues market

Question 7.
The capital market is also known as …………………….
a) Factoring
b) Commodity market
c) Securities Market
d)Foreign Market
Answer:
c) Securities Market

Question 8.
Pick the odd one out:
a) Mutual Funds
b) Venture Funds
c) OTCEI
d) Reserve Funds
Answer:
d) Reserve Funds

Question 9.
Which one is correctly matched?
a) Foreign Exchange Market – All currencies
b) Deviation Market – Indian Currency
c) Hard Commodities Market -Iron and ore
d) Soft Commodities Market – Coffee and Sugar
Answer:
b)Deviation Market Indian Currency

Question 10.
Which one is correctly matched?
a) Venture Fund – Hi -technology projects
b) Mutual Fund – Sale of account receivables.
c) Factoring – Scripless and floorless
d) NSEI – Savings of Small investors
Answer:
a) Venture Fund – Hi -technology projects

Question 11.
How many times security can be sold in a secondary market?
a) Only One Time
b)Two Time
c) Three Times
d) Multiple Times
Answer :
d) Multiple Times

II. Match the following

1. Match List I with List II

List – I List – II
i. NSDL 1. Stock Holding Corporation
ii. SHCIL 2. Transparent System of Securities Trading
iii. NCDs 3. Dematerialisation
iv. NSEI 4. National clearing system

a) i-3, ii-1, iii-4, iv-2
b) i-2, ii-4, iii-1, iv-3
c) i-4, ii-2, iii-3, iv-1
d) i-1, ii-3, iii-2, iv-4
Answer:
a) i-3, ii-1, iii-4, iv-2

III. Assertion and Reason

Question 1.
Assertion (A): Government has liberalised FDI in the country.
Reason (R): It brings foreign capital and technologies.
a) (A) is true (R) is False.
b) (A) is False (R) is True.
c) Both (A) and (R) are true
d) Both (A) and (R) are False
Answer :
c) Both (A) and (R) are True

Question 2.
Assertion (A): Many specialized financial institutions promoted their own venture capital Funds.
Reason (R): These include IFCI, IDBI, SIDBI Venture Funds.
a) (A) is true (R) is also True.
b) (A) is False (R) is True.
c) (A) is true (R) is False
d) Both (A) and (R) are False
Answer :
a) (A) is true (R) is also True

IV. Very Short Answer Questions.

Question 1.
What is the Derivatives market?
Answer:
The derivatives market facilitates the trading in financial instruments such as futures contracts and options used to help control financial risk.

Question 2.
What are the ways by which a company can raise capital in a primary market?
Answer :

  1. Public Issue
  2. Rights Issue
  3. Private placement

Question 3.
What are the methods of raising capital in a primary market by a company?
Answer:
There are three ways by which a company may raise capital in a primary market. They are:

  1. Public Issue
  2. Rights Issue
  3. Private Placement

Question 4.
What is a Rights Issue?
Answer :
When a company wants to raise additional capital, the securities are first offered to the existing shareholders on proportions of the shares held by them.

Question 5.
What is a private placement?
Answer :
It is a way of securities privately to [Their Clients] to a small group of investors.

Question 6.
Write a note on Foreign Exchange Market.
Answer:
The foreign exchange market abets foreign exchange trading. It is the largest, most liquid market in the world with an average traded value of more than $5 trillion per day. It includes all of the currencies in the world and any individual, company or country can participate in it.

Question 7.
What is Deviative Market?
Answer:
It facilitates the trading in financial instruments such as Future contracts and options used to help control financial risk.


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  • Refer TN Board books as well as the books recommended.
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  • Highlight and explain the concepts in details.


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