12th Commerce - Book Back Answers - Chapter 5 - English Medium Guides

  

 

Plus Two / 12th Commerce - Book Back Answers - Chapter 5 - English Medium

Tamil Nadu Board 12th Standard Commerce - Chapter 5: Book Back Answers and Solutions

    This post covers the book back answers and solutions for Chapter 5 – Commerce from the Tamil Nadu State Board 12th Standard textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

    We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

    By going through this material, you’ll gain a strong understanding of Commerce Chapter 5 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

• 1 Mark Questions: Choose the correct answer, Fill in the blanks, Identify the correct statement, Match the following 
• 2 Mark Questions: Answer briefly 
• 3, 4, and 5 Mark Questions: Answer in detail

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 12 students! Prepare well and aim for top scores. Thank you!

Chapter 5: Capital Market

I.Choose the correct answer.

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

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

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 Key:
a) First Time

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

5. The ____was set up by a premier financial institution to allow the trading of securities  across the electronic counters  throughout the country.
a) OTCEI       
b) Factoring    
c) Mutual funds    
d) Venture Funds Institutions
Answer Key:
a) OTCEI

II. Very short answer questions.

1. What is capital Market?
Answer Key:

• Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, and stocks.
• The buying/selling is undertaken by participants such as individuals and institutions.

2. Write a note on OTCEI?
Answer Key:

• The OTCEI was set up by a premier financial institution to allow the trading of securities across the electronic counters throughout the country.
• It addresses some specific problems of both investors and medium size companies.

3. Who are the participants in a capital market?
Answer Key:

• There are many players in the capital market.
• The participants of the capital market include individuals, corporate sectors, Govt. banks and other financial institutions.

4. How is price determined in a capital market?
Answer Key:

• The price of the securities is determined based on the demand and supply prevailing in the capital market for securities.

III. Short answer questions.

1. What are the various kinds of capital market? Explain (any-3)
Answer Key:
Primary Market:

• Primary market is a market for new issues or new financial claims. 
• Hence, it is also called New Issue Market.
• Public Issue
• Rights Issue
• Private Placement

Secondary Market:

• Secondary Market may be defined as the market for old securities, in the sense that securities which are previously issued in the primary market are traded here.
• It covers both stock exchange and over-the counter market.

2. Explain any two functions of capital market?
Answer Key:
Savings and Capital Formation:

• In capital market, various types of securities help to mobilize savings from various sectors of population

Permanent Capital:

• The existence of a capital market/stock exchange enables companies to raise permanent capital.

3. Explain about Factoring and Venture capital market?
Answer Key:
Factoring Institutions:

• “Factoring” is an arrangement whereby a financial institution provides financial accommodation on the basis of assignment/ sale of account receivables.

Venture Fund Institutions:

• Venture capital financing is a form of equity financing designed especially for funding new and innovative project ideas.

IV. Long answer questions.

1. Discuss the characters of a capital market?
Answer Key:
Securities Market:

• The dealings in a capital market are done through the securities like shares, debentures, etc. 
• The capital market is thus called securities market.

Price:

• The price of the securities is determined based on the demand and supply prevailing in the capital market for securities.

Participants:

• There are many players in the capital market. 
• The participants of the capital market include individuals, corporate sectors, Govt., 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 centers known as Stock Exchanges.

Market for Financial Assets:

• Capital market provides a transaction platform for long term financial assets.

2. Briefly explain the function of capital market?(any-5)
Answer Key:
Savings and Capital Formation:

• In capital market, various types of securities help to mobilize savings from various sectors of population.

Permanent Capital:

• The existence of a capital market/stock exchange enables companies to raise permanent capital.

Industrial Growth:

• The stock exchange is a central market through which resources are transferred to the industrial sector of the economy.
• The stock exchange provides a central convenient place where buyers and sellers can easily purchase and sell securities.

Reliable Guide to Performance:

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

3. Explain the various types of New Financial Institutions?
Answer Key:
Venture Fund Institutions:

• Venture capital financing is a form of equity financing designed especially for funding new and innovative project ideas.

Factoring Institutions:

• “Factoring” is an arrangement whereby a financial institution provides financial accommodation on the basis of assignment/ sale of account receivables.

Over the Counter Exchange of India (OTCEI):

• The OTCEI was set up by a premier financial institution to allow the trading of securities across the electronic counters throughout the country.

Mutual Funds:

• Financial institutions that provide facilities for channeling savings of small investors into avenues of productive investments are called ‘Mutual Funds’.

National Securities Depositories Limited (NSDL):

• The NSDL was set up in the year 1996 for achieving a time bound dematerialization as well as dematerialization of shares.

 

Prepared By:

 

B. MUTHUKUMAR 
PG ASST COMMERCE
MKVK MATRIC HR SEC SCHOOL 
TENKASI