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Home Questions EF4WJK5E6J
Target Exam

CUET

Subject

Business Studies

Chapter

Financial Markets

Question:

Match List-I with List-II.

List-I List-II
(A) Function of Financial Market (I) E-IPO, Rights issue
(B) Instrument of Money (II) Offer for sale
(C) Primary Market (III) Providing liquidity to financial Assets
(D) Methods of floatation (IV) Call Money, Commercial Bills

Choose the correct answer from the options given below :

Options:

(A)-(II), (B)-(III), (C)-(IV), (D)-(I)

(A)-(I), (B)-(III), (C)-(IV), (D)-(II)

(A)-(III), (B)-(IV), (C)-(I), (D)-(II)

(A)-(IV), (B)-(III), (C)-(II), (D)-(I)

Correct Answer:

(A)-(III), (B)-(IV), (C)-(I), (D)-(II)

Explanation:

The correct answer is option (3) : (A)-(III), (B)-(IV), (C)-(I), (D)-(II)

1. Mobilisation of Savings and Channeling them into the most Productive Uses: A financial market facilitates the transfer of savings from savers to investors.

2. Facilitating Price Discovery: You all know that the forces of demand and supply help to establish a price for a commodity or service in the market.. The interaction between them helps to establish a price for the financial asset which is being traded in that particular market.

3. Providing Liquidity to Financial Assets(III): Assets: Financial markets facilitate easy purchase and sale of financial assets. In doing so they provide liquidity to financial assets, so that they can be easily converted into cash whenever required.

4.Reducing the Cost of Transactions: Financial markets provide valuable information about securities being traded in the market. It helps to save time, effort and money that both buyers and sellers of a financial asset would have to otherwise spend to try and find each other. Money Market (B) is a market for short-term funds. It deals in monetory assets whose period of maturity is less than one year. The instruments of money market includes treasury bills, commercial paper, (IV) call money, Certificate of deposit,(IV) commercial bills, participation certificates and money market mutual funds.

  • Methods of Floatation (D)

Offer for Sale (II) : Under this method securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers.

  • Primary market (C)

Rights Issue (I) : This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.

E-IPOs (I) : A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange.

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