Given below are two statements:
Assertion (A): A stock exchange provides scope for speculative activity within the provisions of law, in a restricted and controlled manner.
Reason (R): A certain degree of healthy speculation is necessary to ensure safety of transactions in the stock market.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) is true but (R) is false.
Assertion (A): A stock exchange provides scope for speculative activity within the provisions of law, in a restricted and controlled manner. — True. The exchange allows speculation within the provisions of law, in a restricted and controlled manner.
Reason (R): A certain degree of healthy speculation is necessary to ensure safety of transactions in the stock market. — False. Healthy speculation is needed to ensure liquidity and price continuity. Safety of transaction comes from well-regulated membership and dealings under the legal framework.
NCERT (Pre-rationalised Edition): “3. Safety of Transaction: The membership of a stock exchange is well-regulated and its dealings are well defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal on the market.” “6. Providing Scope for Speculation: The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled manner. It is generally accepted that a certain degree of healthy speculation is necessary to ensure liquidity and price continuity in the stock market.” |