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Business Studies · 2023 · 4 marks
CBSE 2023 · Region 1 · Set 2 · Q29
(a) Fixed capital refers to investment in long term assets. Explain any two factors affecting the fixed capital requirements of an enterprise.
(a)
Fixed capital refers to investment in long term
assets. Explain any two factors affecting the fixed capital
requirements of an enterprise.
OR
(b)
Distinguish between Capital Market and Money
Market on the basis of the following:
(i)
Duration
(ii)
Liquidity
(iii)
Instruments
(iv)
Expected return
Marking-scheme solution
Factors affecting the fixed capital requirements of
an enterprise:
1. Nature of Business
2. Scale of Operations
3. Choice of Technique
4. Technology Upgradation
5. Growth Prospects
6. Diversification
7. Financing Alternatives
8. Level of Collaboration
Distinguish between Capital Market and Money
Market on the basis of the following:
(i)
Duration
(ii)
Liquidity
(iii)
Instruments
(iv)
Expected return
Difference between capital market and money
market
| Basis | Capital Market | Money Market |
| Duration | Capital market deals in medium and long term securities. | Money market instruments have a maximum tenure of one year. |
| Liquidity | Capital market securities are considered liquid | Money market instruments enjoy a higher degree of |
| investments because they are marketable on the stock exchanges. | liquidity as compared to capital market. | |
| Instruments | Equity shares, debentures, bonds, preference shares etc | Short term debt instruments such as T-bills, trade bills (reports), commercial paper and certificates of deposit. |
| Expected return | The investment in capital markets generally yield a higher return. | The investment in money markets generally yield a lower return for investors than the capital markets |
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CBSE Class 12 Business Studies past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.