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Ch 7Fundamentals of Financial Markets — Class 12 Commerce, concept-first.

Fundamentals of Financial Markets is the chapter in the Andhra Pradesh Intermediate second-year Commerce syllabus that shifts the discussion away from a single business's own internal finance (already covered in your Basics of Business Finance and Sources of Finance chapters in Year 1) to the wider, organised MARKETPLA…

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Key concepts

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Meaning and Classification of Financial Markets

A financial market is a mechanism bringing together those with surplus funds and those needing funds, enabling the transfer of funds through the purchase and sale of financial instruments.

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Chapter contents

The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.

Overview

Fundamentals of Financial Markets is the chapter in the Andhra Pradesh Intermediate second-year Commerce syllabus that shifts the discussion away from a single business's own internal finance (already…

1

Meaning and Classification of Financial Markets

A financial market is a mechanism — not necessarily a physical place — that brings together persons and institutions with surplus funds (savers/lenders/investors) and persons and institutions needing…

2

Money Market — Meaning and Features

The money market is that segment of the financial market in which short-term funds — ordinarily for a period up to one year — are borrowed and lent, through the purchase and sale of short-term, highly…

3

Money Market Instruments

The money market functions through a defined set of short-term instruments, each suited to a slightly different borrower and purpose. The instruments prescribed for this chapter are:

4

Capital Market — Meaning and Features

The capital market is that segment of the financial market in which medium- and long-term funds — ordinarily for a period exceeding one year, and for equity shares with no fixed repayment period at al…

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Capital Market Instruments

The capital market functions through a defined set of long-term instruments — some representing OWNERSHIP capital and some representing BORROWED (debt) capital:

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Primary Market and Secondary Market

The capital market operates through two connected segments, distinguished by whether a security is being sold for the FIRST time or is being RESOLD among investors.

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Functions of Financial Markets

Taken together, the money market and the capital market perform a set of functions that are essential to how an economy actually converts scattered individual savings into productive investment:

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

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+Show 7 questions7 questions
  1. Q1Financial markets are classified into the money market and the capital market on the basis of: (A) The type of institution dealing in the in…Free
  2. Q2A short-term instrument issued by the Government of India at a discount to its face value, redeemed at full face value on maturity, and rega…Free
  3. Q3An unsecured, short-term promissory note issued at a discount by large, highly rated companies to meet their working-capital requirement, as…Free
  4. Q4Extremely short-term borrowing and lending between banks, to meet each other's day-to-day shortfalls in statutory reserve requirements, repa…Preview
  5. Q6A shareholder who is entitled to receive dividend at a fixed, pre-decided rate BEFORE any dividend is paid to equity shareholders, and to re…Preview
  6. Q7An instrument that acknowledges a company's debt, carries a fixed rate of interest payable whether or not the company earns a profit, and is…Preview
  7. Q9The segment of the capital market in which a company issues shares to the general public for the very first time, resulting in the company g…Preview
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  1. Q5Name and briefly explain any four money market instruments.Free
  2. Q8Distinguish between equity shares and preference shares on the basis of dividend, voting right and repayment of capital.Preview
  3. Q12Explain any four functions performed by financial markets.Preview
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  1. Q10Sriram Textiles Ltd. needs Rs 50 lakh for just 90 days to bridge a temporary gap in working capital caused by a delay in customer payments,…Free
  2. Q11Meera bought 200 shares of a company directly from the company when it first went public through its IPO. A year later, she sold all 200 sha…Preview