FINANCIAL SERVICES - CPC6A – 2 Mark Questions From Unit - 3

1. What is money market?

 The money market is a part of the economy which gives short-term funds.
 A section of the financial market where high liquid financial instruments with
short-term maturities are traded
 The money market deals in short-term loans, for a period of less than or equal
to 365 days

2. Expand the terms IPO and IRDA

 IPO - Initial Public Offering
o A process by which a company offers its shares to the public for the first
time
 IRDA - Insurance Regulatory and Development Authority of India
o It is the apex body managing the insurance business in India

3. Define a Depository
 Depository is a place where financial securities are saved in dematerialised
(DEMAT) form
 It is responsible for maintenance of ownership records and helps trading in
dematerialised securities
 Depository Participant (DP): It is an Agent of the depository

4. What is capital market?

 Capital market is where both equity and debt instrument like equity shares,
preference shares, debentures, bonds, etc. are bought and sold.
 A place where various companies trade different financial instruments
 FINANCIAL SERVICES - CPC6A – 2 Mark Questions From Unit - 3

5. Define Primary Market

 The primary market is the part of the capital market
 It also known as a New Issue Market
 It deals with the issuance and sale of securities to investors directly
 It is a market where buyers and sellers discuss and transact directly without any
intermediaries or resellers

6. Abbreviate SEBI
 Securities and Exchange Board of India (SEBI)
 It is the regulator of the securities and commodity market in India owned by the
Government of India

7. What is stock exchange?

 A stock exchange, securities exchange or bourse is a facility where stockbrokers
and traders can buy and sell securities, such as shares of stock and bonds and
other financial instruments
 It acts as a market where stock buyers connect with stock sellers.

8. What is a rights issue?

 It refers to issuing shares to the present share holders instead of going to the
public
 It is a way by which a listed company can raise additional capital.
 the company gives its active shareholders the right to subscribe to newly issued
shares in share to their active holdings