✓ Board-verified
Business Studies · 2024 · 3 marks
Financial MarketsSecurities and Exchange Board of India (SEBI) - Objectives and Functions3 marksshort answer
CBSE 2024 · Region 1 · Set 1 · Q24
(a) State any three protective functions of Securities and Exchange Board of India.
(a)
State any three protective functions of Securities and Exchange
Board of India.
OR
(b)
Differentiate between ‘Money Market’ and ‘Capital Market’ on any
three bases.
Marking-scheme solution
Protective functions of Securities and Exchange Board of
India are: (Any $\displaystyle 3$)
(i)
It prohibits fraudulent and unfair trade practices like
making misleading statements, manipulations, price
rigging etc.
(ii)
It controls insider trading and imposing penalties for
such practices.
(iii)
It undertakes steps for investor protection.
(iv)
It promotes fair practices and code of conduct in
securities market.
Q(b) Differentiate between 'Money Market' and 'Capital
Market' on any three bases.
Difference between 'Money Market' and 'Capital
Market' :
| Basis | Money market | Capital market |
| Participants | Participants are by and large, institutional participants such as the RBI, banks, financial institutions and finance companies. | Participants are financial institutions, banks, corporate entities, foreign investors and ordinary retail investors/public. |
| Instruments | The main instruments traded are short term debt instruments such as T-bills, trade bills reports, commercial paper and certificates of deposit. | The main instruments traded are equity shares, debentures, bonds, preference shares etc. |
| Investment outlay | Investment in money market entail huge sums of money as instruments are | Investment in capital market does not necessarily require a huge financial |
| quite expensive | outlay | |
| Duration | It deals in instruments with maximum tenure of one year | It deals in medium and long term securities |
| Liquidity | Money market instruments enjoy relatively a higher degree of liquidity as there is formal arrangement for this. | Capital market securities are considered liquid investments because they are marketable on the stock exchanges, however a share may not be actively traded. |
| Safety | Money market is generally much safer with a minimum risk of default | Capital market instruments are riskier both with respect to returns and principal repayment |
| Expected return | Investment in money market generally yield relatively lower rate of return | Investment in capital market generally yield higher return for investors. |
More from Financial Markets
- From the following, identify the one which is a function of stock exchange:2024
- Veena received ₹ 40 lakhs as a gift from her father. She was discussing various avenues of investing her money with her brother. He advised Veena to…2025
- ‘Capital Market instruments are riskier both with respect to returns and principal repayment as compared to Money Market instruments.’ This…2023
- Keeping in mind the emerging nature of the securities market in India, Securities and Exchange Board of India was entrusted with the twin task of…2023
- ‘Neo Appliances Ltd.’, a company known for its innovative kitchen devices was established in 2001. Over the years, the company performed well and the…2026
- Which of the following statements is? incorrect2023
- Differentiate between Capital Market and Money Market on the basis of: (i) Investment outlay (ii) Instruments (iii) Safety OR State how the following…2026
- The process of holding securities in electronic form is called dematerialisation. Which of the following statement does not relate to…2023
CBSE Class 12 Business Studies past-paper question from the 2024 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.