Business And Commerce - Study Mode

[#271] Which of the following methods is not used for raising capital through the sale of new securities?
Correct Answer

(C) Stock exchange placing

Explanation

Solution: Stock exchange placing methods is not used for raising capital through the sale of new securities. The companies raise money in the primary market through securities such as shares, debentures, loans and deposits, preference shares etc. Let us take a look the various methods of how new securities are floated in the primary market.

[#272] The most common method used for marketing of new securities is _________.
Correct Answer

(C) direct sale to public through prospectus

Explanation

Solution: The most common method used for marketing of new securities is direct sale to public through prospectus.

[#273] The first stock exchange was set up in India in __________.
Correct Answer

(B) Bombay

Explanation

Solution: The first stock exchange was set up in India in Bombay. The Bombay Stock Exchange (BSE) is the first and largest securities market in India and was established in 1875 as the Native Share and Stock Brokers' Association.

[#274] Stock Exchanges in India are under the control of ____________.
Correct Answer

(A) SEBI

Explanation

Solution: The stock market in each country now is governed/controlled by the corresponding governing bodies in that country. Ex: SEC (Securities Exchange Commission) for USA , SEBI (Securities & Exchanges Board of India) for India. Earlier Stock Exchanges in India were continued to be regulated directly by the Government of India. In the year 1988 the Government of India constituted SEBI to act as the independent regulator of Stock exchanges, the primary market, Mutual Funds etc. Securities Scam of 1990-91 mastered by the stockbroker Harshad Mehta, exposed by journalist Sucheta Dalal, prompted Government to make SEBI a statutory and autonomous regulatory board with responsibilities, to cover both development & regulation of the market.

[#275] A speculator who applies for new share is ________.
Correct Answer

(A) a stag

Explanation

Solution: A speculator who applies for new share is a stag. An investor or speculator who subscribes to a new issue, expecting the price of the stock to rise immediately upon the start of trading is known as a stag. The sole aim of a stag is to sell the shares soon after allotment to realise a quick profit.