Given below are two statements:
Statement I: A financial market is a market for the creation and exchange of financial assets.
Statement II: The purchase and sale of existing equity shares is a financial transaction.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both Statement I and Statement II are correct.
Statement I: A financial market is a market for the creation and exchange of financial assets. — Correct. A financial market is where financial assets are created and exchanged. It exists wherever a financial transaction takes place.
Statement II: The purchase and sale of existing equity shares is a financial transaction. — Correct. A financial transaction can take two forms. One is the creation of new assets, such as the first issue of shares by a firm. The other is the purchase and sale of existing assets such as equity shares, debentures and bonds.
NCERT (Pre-rationalised Edition): “CONCEPT OF FINANCIAL MARKET A financial market is a market for the creation and exchange of financial assets. Financial markets exist wherever a financial transaction occurs. Financial transactions could be in the form of creation of financial assets such as the initial issue of shares and debentures by a firm or the purchase and sale of existing financial assets like equity shares, debentures and bonds.” |