Q.(a) Distinguish a Cheque and a Bill of Exchange. (any 5)
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Start your 14-day free trial to unlock the full solution →(a) A cheque is drawn on a banker, is payable on demand, needs no acceptance/stamp and can be crossed; a bill of exchange may be drawn on anyone, needs acceptance and a stamp, may be a time instrument with grace days, and cannot be crossed. (b) The capital market deals in long-term securities through two segments and various intermediaries, is regulated by SEBI and aids capital formation.
This is a 5-mark Part-IV question with an internal OR choice; both alternatives are answered.
(a) Cheque vs Bill of Exchange (any five differences, from the Negotiable Instruments Act, 1881 chapter of the Tamil Nadu HSC Class-12 Commerce syllabus):
| Basis | Cheque | Bill of Exchange |
|---|---|---|
| Drawee | Always drawn on a banker | May be drawn on any person, including a bank |
| Acceptance | Needs no acceptance | Must be accepted by the drawee before he is liable |
| Payment | Always payable on demand | Payable on demand or after a fixed period |
| Days of grace | No days of grace | Three days of grace allowed for time bills |
| Crossing | Can be crossed | Cannot be crossed |
| Stamp | Requires no stamp | Must be properly stamped |
| Notice of dishonour | Not necessary | Necessary to hold prior parties liable |
(b) Characteristics of a Capital Market (from the Capital Market chapter):
- Deals in long-term funds: the capital market deals in medium- and long-term funds required for fixed capital.
- Deals in securities: it trades in securities such as shares, debentures, bonds and government securities.
- Two segments: it consists of the primary (new issue) market and the secondary (stock exchange) market.
- Presence of intermediaries: it functions through intermediaries such as brokers, underwriters, merchant bankers and registrars. …
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