Question 22 of 38
Q.(a) Explain any five functions of Stock Exchange.
(OR)
(b) Explain any five kinds of Debentures.
Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2022Subjective· 5mImportance★★★★★
58% · 22/38 Questions
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Start your 14-day free trial to unlock the full solution →(a) A stock exchange provides a ready market, prices securities, mobilises savings for capital formation, ensures safe and regulated dealings, and serves as an economic barometer. (b) Debentures are classified by security, redemption, convertibility, transferability (registration) and priority of charge.
(a) Five functions of a stock exchange
In the Tamil Nadu HSC Class-12 Commerce course, the main functions of a stock exchange are:
- Ready and continuous market — it provides a ready, continuous and organised market where securities can be bought and sold easily at any time.
- Evaluation / pricing of securities — the constant interaction of buyers and sellers determines fair market prices of shares and other securities.
- Mobilisation of savings and capital formation — it channels the savings of the public into productive investment, aiding companies in raising long-term capital.
- Safety of transactions — dealings are conducted under strict rules and regulations (and the supervision of SEBI), which protects investors from fraud.
- Economic barometer — share-price movements reflect the state of business and the economy, so the exchange acts as an indicator of economic conditions.
- Liquidity — investors can convert securities into cash quickly (an additional function).
(b) Five kinds of debentures
Debentures are long-term instruments of borrowing by a company. Their kinds include:
- Secured (mortgage) and unsecured (naked) debentures — secured debentures are backed by a charge on the company's assets; unsecured ones carry no such charge.
- Redeemable and irredeemable debentures — redeemable debentures are repaid after a fixed period; irredeemable (perpetual) debentures are repaid only on winding up. …
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