12th Commerce EM Study Material 2023 2024 English Medium PDF Download

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1.6 Principles of Modern Management

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UNIT I  Chapter-1
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m
Ans. Authority means the right of a superior to give the subordinates who report him directly is
laiai order
lsaailaito his subordinates
lsaailai whereas lsresponsibility
aailai lsaailai lailaithe span of i i i i
adsaasal a a a a adsaasaas saslaala saslaala
adacalled adaada management.
s s s s as
adaadameans obligation
PP PP adaada for performance.
PPadaada PP adaada PP PP PP adaada PaPdad
co
III. S hort A nswer Q uestions .
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal 1. a a a a a a a as
Pa Define the term
a management.
Pa d d PaPd d d
PaPa d d
PaPa d d
PaPa d d
[PTA-1;
PaPa Aug-'21; FRT
d d
PaP&aJuly-'22]
d PaPdad
Ans. According to Koontz and Weihrich, “Management is the process of designing and maintaining of an
.
environment in which
i i individuals working together in
i igroups efficiently
i i accomplish selected aims”. i i
laiai i i
saaslaala saaslaala
i i
saaslaala saaslaala saaslaala
i i
saaslaala saaslaala
adsaasal
ks
d a d a d a d a d a d a d a as
2.
a
P Pa d Differentiate
a
P Pa management
d afrom
P Pa d Administration.
a
P Pa d (any 3) a
P Pa d [Govt. a
P Pa d
MQP-'19; PTA-2; HY-'19;
a
P Pa d
May-'22] PaPdad
Ans.
laiai saaslaala Basisdadsaaslaala Management
saaslaalaAdministration
i i i i i i i i i i i i i i
adsaasal d a d a saaslaala d a saaslaala d a d a saaslaala d asaaslaala as
PaPdad
d
PaPa1. MeaningPaPa d
oo
PaPa way of managing
An organised PaPa d d
PaPa of administering
The process d
PaPa an organisation
PaPa d
people and things of a by a group of people is known as the
business organisation is called administration i i
laiai aslaailai aslaaila i aslaailai aslaailai saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a s
a d a s
a management
d a s
a d a s
a da d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net
2. Authority Middle and lower level Top level
ab
laiai 3. lConcerned
i i with laia Policy
i implementation
i i Policy
i i formulation i i i i i i
adsaasal d a saasaala d a saasal d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala as
d
PaPa4. Role PaPa d Executive
PaPa d PaPa d Decisive
PaPa d PaPa d PaPa d PaPdad
5. Area of operation It works under administration It has full control over the activities of the organisation.
ur
laiai aslaailai i i
saaslaala of Taylor?
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala[QY-'19;dSep-2020]
i i
saaslaala
adsaasal 3.daadsaWhat are thed principles
a d a d a d a d a a as
a
PP a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
Ans. Taylor propounded the principles of scientific management. They are :
.s
(i)ai iScience, NotaRule

laiai lala lailai of Thumb i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a s
a as
(ii) a
Harmony,
d saa s
Not Discord d a d a d a d a d a as
(iii) Mental Revolution
w
laiai (iv) Co-operation, Not individualism

adsaasal a s aslaailai a s aslaailai asaaslaailai a aslaailai
shis a
laailai
saasefficiency a aslaailai
sprosperity. a
i i
saaslaala as
a d
P Pa d a(v) Development
a
P Pad d a of each and
a
P Pad d every person
a to
d
P Pa d a or her greatest
a
P Pad d and
a
P Pad d a a d
P Pa d PaPdad
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4. What determines the span of management? [FRT-'22]

laiai Ans.s(i)aslaailaiThe Spanasof laailai
asManagement has aailaiimplications:
saasltwo
i i
saaslaala
i i
saaslaala
i i
saaslaala saaslaala
i i
adsaasal d a a d a d a d a d a d a d a as
PaPa d PaPa d
1. Influences PaPa d
the complexities aPa d
of thePindividual
d
PaPa job
manager‘s PaPa d PaPa d PaPdad
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2. Determine the shape or configuration of the Organization

laiai sa(ii)
l ai
asal Th a i aailai
e span sofaslmanagement laailai to the horizontal
sisaasrelated
i i
saaslaala levels sof aailaiorganization
aslthe ilai
saaslaastructure. There i i
saaslaaislaa
adsaasal d a d a a d a d a d a a d a d a as
a
P Pa d wide a
PP d
a a narrow span
and a d
P Paof management. a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(iii) W ith the wider span, there will be less hierarchical levels, and thus, the organizational structure
laiai saaslaala would dbe sflatter.
i i aslaailai i i i i i i i i i i
adsaasal d a a a d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala as
d
PaPa (iv) Whereas, d
PaPa with the narrow d
PaPa span, the Phierarchical
aPa d PaP
levels d
increases,
a PaP
hence the d
a organizational d
PaPastructure PaPdad
would be tall.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala s2aslaailai i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a da d a d a a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
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saaslaala
i i
saaslaala
a
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P Pa d a d
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P Pa d a
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laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
PaPa d PaPa d PaPa d PaPa d PSura’s
aPa d XIIPStd d
aPa - Commerce PaPa d PaPdad
IV. L ong A nswer Q uestions . 2. Explain the principles of modern management.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i (any
saaslaala
i 5) i i
saaslaala [PTA-2; Govt. iai & QY-'19;
saaslaalMQP
i i
saaslaala
a d a d
1.P PaExplain the Pconcept
Pa a
P Pa d
of management. a
(any P5)Pa
d a
P Pa d a d
Aug-'21;
P Pa FRT, May & a d
P July-'22]
Pa PaPdad
[FRT-'22] Ans. Henry Fayol is the father of modern management.
The
i followingalare
laiai Ans. Theamanagement
laailai conceptlaailacan
i be understood laailai from saslaaila aailathe
i major principles
laailai
of modern i i
saslaala
adsaasal aas s s
aPdaada
as aa s as aa management
aPdaada
s are,
s
aPdaada
s a s
aPdaada as
PaPdaitsd profound Pcharacteristic features
PaPdadas follows:PaPdad P P
(i) Division of work : According to this P PaPdad
(i) Body of Knowledge : Management has
m
principle the whole work is divided into
now developed iinto a specialised body small atasks. i i The specialization of the
laiai l ai a i la a i l a i a i l a i a i
saslaalaaccording ai ai
slalthe
i i
saaslaaala
adsaasal d a saasaofl management d a saasaltheory and d a asal
saphilosophy. d a saasal workforce
d a d a saato skillsd aof as
a
P Pa d a d a
P Pa literaturePisPagrowing in P d a
allP
ad a
P Pa d a
P a d a
P Pa d PaPdad
Management person, creating Pspecific personal and
co
countries. professional development within the
laiai (ii) ilai ai i aslaailai i i labouralforce i i and therefore i i increasing i i
adsaasal d a saaslaaManagement d a saaTools
slala : Toolsdofadsmanagement
a d a saaslaala d a sasaala
productivity. d a saaslaala d a saaslaala as
PaPa d have been d
PaPadeveloped such PaPaas, accounting, PaPa d PaPa d PaPa d PaPa d PaPdad
business law, psychology, statistics, (ii) Authority and Responsibility :
.
econometrics, data processing, etc. Authority means the right of a superior
laiai lsaailai lsaailai lsaailai lsaailai to give ilai order toalhis
saaslaathe
i i
sasaala subordinates
i i
saaslaala
adsaasal
ks
a s
(iii)aa Separate a saa
Discipline : Management
a saa studies a saa a a a as
a d
P Pa d a
P Pad d a
P Pad d a
P Pad d a d
Pwhereasd a d
responsibility d
P Pa means obligation a d d PaPdad
in many universities and institutions of
Pa P Pa
for performance.
higher learning are recognised as a separate
(iii)
i Discipline laaila:i
Principles of Management
laiai l ilai
discipline.
a laailai laailai laaila aslaailai in relation i i
saaslaala
adsaasal d a saas a d a saas d a saas d a saas It is
d a saa
obedience,
s proper
d a saconduct d a as
PaPdad
d
PaPa(iv) Specialisation d
PaPa : There isP aa
oo
Pa d
growing tendency PaPa d d
PtoaPaothers, respect PaPofa d
authority,Petc.
aPa d
It is
to select and appoint highly qualified, essential for the smooth functioning of all
laiai trained and experienced persons lto manage i i organisations.
adsaasal s aslaailai s aslaailai s asaailai saaslaala saaslaala
i i i i
saaslaala
i i
saaslaala as
d a a the business
d a ain each functional
d a a areas of d a (iv) Unity
d a of command d a
: d a
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net
management.
ab
This principle states that each sub-

(v) Code of Conduct : Enlightened businessmen ordinate should receive orders and be
laiai l a ilai
sasahave recognised l a ilai
sasathat business l a ilai
smanagement la ilai accountable i i
saaslaala to onedand laailaione superior.
saasonly
i i
saaslaala
adsaasal d a a
d a a
d a aasa d a a
sasa d a a d a as
PaPa d d
PaPa institution Pand
is a social
d
aPa it has social PaPa d d
aPa of direction
(v) PUnity PaPa :
d PaPa d PaPdad
responsibilities to be fulfilled – towards All related activities should be put under
ur
laiai customers, employees, and the public or one group, laailaithere should ilbe
ai one plansaof
adsaasal s aslaailai s aslaailai s aslaailai s aslaailai action s afor
s them, and aslaashould
they
s be under
ai i
slala as
a d
P Pa
a
d a community. a
P Pad ad a a
P Pad a
d a a
P Pad a
d a a d a
d a a d ad a a d ad a
PaPdad
PthePacontrol of one a
P Pmanager. P Pa
PTA Questions
aailai Answers
.s
laiai laailai laailai laailai land i i

saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a saas d a s
a as d a s
a as da s
a as d a da da as
I.P S a d
aPhort d
PaPaQ uestions P
A nswer
a d
. Pa 3 M arks PaPa d PaPa d PaPa d PaPa d PaPdad
the day to day life like a mason or carpenter
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1. Is management an Art or Science? lailai or mechanic ilai or a musician aailaibeing ablesatolaailai

laiai aslaailai aslaailai aslaailai perform aslaatheir aslart
adsaasal a s a s a s asa a s a s respective
a s they learnt
a aby s as
PaPda d
a a a a a a
PaPdad PaP[PTA-2;
dad FRT-'22] PaPdad PaPdad PaPdad PaPdad PaPdad
way of skill display before anybody under
w
Ans. Is Management a Science :

Management is an in–exact science, ibecause any circumstances.
laiai l ailai l a ilai l a a i l a ila i
Management aailaboth
saaslis
i - Science ilai an art: alailai
saaslaaand
adsaasal d in
a asa science,dthe
sapure a a a
sasprinciples are
d a a
sput
a
l
sainto test dadsasa a
d a d a daadsasa as
d
PaPain a laboratory d
PaPaand they arePaeither d
Pa proved PoraPa d
PaPa Management d
PaPa is neither PaaPscience PaPdad
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To conclude,
disproved exactly and precisely. nor an art, but a combination of both requiring
laiai i
Is sManagement
l a a i ansa Art:
l a i a i l a i a i la i
saasalpeople holding
a i ilai
saaslaamanagerial
i i
positions
saaslaala to apply aslaailai
sathe
adsaasal d a aasal
d a a sal d a saasal d a d a d a d a as
a d
P Pa(i) Everyone a a d
P Pbelieves that P a
Pa d
management a
anPa
is P d scientific
a d
P PamanagementPprinciplesaPa d a
P Pa d
and displaying PaPdad
art. popular managerial skills to accomplish the
(ii)ala Because, the aconcepti i of art denotes i i the organizational goals as efficiently and as quickly
laiai sasala
i i
saslaala saaslaala
i i
saaslaala laailai aslaailai aslaailai
adsaasal a learning a a a as possible
a saaso
s as to be a scompetitive
a ina sathe as
d
PaPa d PaPofa skills and practicing
d d PaPad d them PinaPa d d PaPad d Pa ad d d
PaPa d PaPdad
globalised environmentPof business.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
3adsaaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a da d a d d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
PaPa Sura’sPaXII
d d d
Pa Std - Commerce
d d
PaPa d d
PaPa d d
PaPa d d
PaPa d d
PaPa d PaPdad
II. L ong A nswer Q uestions . 5 M arks 3. Mental Revolution :
(i) aThe
laiai saslaalatechnique saaof aimental revolution
i i i i i i i i i i ai i i
adsaasal a saaslaala a saaslaala a saaslaala a saaslaala a a slalin a saaslaala as
1.
a d
P Pa d Describe a the
d
P Pa d principles
a
P Pad d of scientific
a d
P Pa d a
P Pad d involves aachange
P Pad d the attitude
a
P Pad d of PaPdad
management. [PTA-1] workers and management towards
each other.
Ans. Principles of scientific management propounded

laiai ilai
laaTaylor laailai in brief sasasfollows
laailai : i i
saaslaala (ii)saThus,ai i
slala mental aslaailai
sarevolution requires i i
saaslaalaa
adsaasal d as aby
as are dexplained
a saas d a a d a d a a d a d a as
d
PaPa Science, Not d
PaPaRule of Thumb PaPa: d PaPa d d
PaPa completePachange Pa d d
in thePaoutlook
Pa of PaPdad
(i) Rule of Thumb means decisions taken both management and workers.
m
by manager as per their personal ai i 4. Co-operation, Not Individualism :
laiai aslaailai judgements. aslaailai aslaailai saaslala ai i
slala principle
(i)asaaThis
i i
saasislaalaan extension
iai
saaslaalof
adsaasal d a sa d a sa d a sa d a d d a d a as
a
P Pa d
(ii) P
a d
APasmall production
a d
P Pa activityP P a ad
like
a d a
P Pa principlePofP‘Harmony
a d –P a
not d
Padiscord’. PaPdad
co
loading iron sheets into box cars can (ii) Co-operation, mutual confidence,
be scientifically
ilai planned. sense of goodwilli i should prevail
laiai i i
saaslaala(iii) Decision saaslaashould
ilai
saaslaaon
i i
saaslaala laailai both, smanagers,
aslaala iai
saaslaalas
adsaasal d a d a be based
d a scientific
d a d a saaamong
s d a a asdawell as
PaPa d aPa d
Penquire aPa d
with P cause
aPa
and Peffect
d d
PaPa workers.PaPa d PaPa d PaPdad
relationships. 5. Development of each and every person
.
laiai 2. i Harmony, Not aiDiscord : ala i i i to hislaiaori her greatest efficiency la and
adsaasal
l a a i
saasal (i) Taylor slala
i alai saaslaala asal aslaailai asailai
ks
d a d a saaemphasised d a sasthere
that should
d a prosperity:
a
dad sa a sa a sa as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaP(i) adad PaPdad also PaPdad
be complete harmony between the EfficiencyP Pof any organisation
workers and the management. depends on the skills and capabilities
laiai ila(ii)
i ai i
Since sifalthere i i i i oflaits
i iemployeesatolaailagreat
i extent. lailai
sala is any conflict
saaslaala between
l a saaslaala
adsaasal d a a
sasa d a a d a d a (ii)
d a sala
saaEmployees d a sasa be scientifically
should asaasa as
Pthe
aPatwo, it will not PaPbe
a beneficial either PaPdad PaPdad
PaPa d d
ood PaPa d PaPa d
selected.
PaPa d
for the workers or the management.
(iii) Both the management and the workers (iii) This ultimately helps to attain
laiai lsaailai shouldsarealise ai i saaefficiency and aprosperity for aboth
i i i i ai i i i i i
adsaasal a saa a a a saaslaala of each
slala the importance a saaslaala a slala a saslaala a saslaala as
a d
P Pa d a d
Pother.
Pa d a
P Pad d a
P Pad d a
P Pad d organisationa
P Padand
d the employees.
a
P Pad d PaPdad
www.Padasalai.Net
ab
Government Exam Questions and Answers

laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
d
PaPI.aC hoose the d
PaPaC orrect APnswers
aPa d
. 1 MP aPa
ark
d (a)PaP
(A)d d
a and (R) arePcorrect
aPa and (R) PisaPthed
a correct PaPdad
explanation of (A).
ur
1.Who is the ‘Fatheraof Modern Management’? (b) (A) and (R) are correct and (R) is lathe
laiai aslaailai aslailai i i
saaslaala [HY-'19]
i i
saaslaala aslaailai aslaailai saasala
i i
adsaasal d as(a)
a Mr. F.W. d s
Taylor
a a d a d a d a s
incorrect
a explanation
d a sa of (A). d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(b) Mr. Henry Fayol (c) (A) is incorrect but (R) is correct.
.s
(c) i Mr. Peter F. Drucker (d) (A) is correct but (R) is aincorrect.
laiai aslaala i laailai i i
saaslaala
i i
slalacorrect and
ai i
slalais
adsaasal d a s
a(d) Mr. Louis
d A.
a saasAllen d a da [Ans.
d a saa(b)
s (A) and (R)
d a saaare d a saa(R) as
PaPa d
PaPa d aPa
[Ans.P(b)
d PaPa
Mr. Henry Fayol]
d PaPa d PaPa d PaPa d PaPdad
the incorrect explanation of (A)]
w
2. “Management is aai multipurpose organ that 4. Which of the following was/are the principles
laiai lsaailai lsalai lsaailai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a s
a a
manages a d a s
a a
business and d as
manages
aa Manager,
d a of Taylor?
d a d a d[FRT-'22]
a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
(a)P P
a d
Science, Not Rule
a d
P Paof Thumb P Pa a d PaPdad
and manages worker and work.” Who said
w
these words? [Mar-2020] (b) Harmony, not Discord

laiai l
sa(a) ailai
sa George Odiorne l a ilai
(b) aHenry l a ilai
sasa Fayol dadsaaslaala
i i i i
saaslaala not dIndividualism
(c) Cooperation, i i
saaslaala
i i
saaslaala
adsaasal d a a
d a a
sasa d
a
d a a d a as
d
PaPa (c) PeterPF.aPDrucker
a d d
aPaF.W. TaylorPaPa (d)PaP
d d
a the above PaPa [Ans. (d) All
All PaPthed
a above PaPdad
w
P(d)
[Ans. (C) Peter F. Drucker] II. S hort A nswer Q uestions . 3 M arks
laiai l a i a i l a ilai l aailai laailai laailai l aailai i i
saaslaala
adsaasal s as a l
3.dadaAssertion (A)
d a saa
: sManagement
a d a saaknowledge
s dis
a saas d a saas d a saas d a as
a a
P Pa the best PpassportPa d a d
a the world
P Pinto
to enter
a d
a 1. Define
P Pof a d a
P Pa the term PmanagementPa d a
P Pa d
according to PaPdad
employment. Peter F. Drucker. [HY-'19]
laiai i i i i i i Ans.
i i According toi Peter
i F. Drucker, i “Management
i isi ai
adsaasal a saReason
aslaala (R) : Management
a saaslaala literature
a saaslaalais growing a saaslaala a saaslaala a saaslaala a saaslaala as
d
PaPa d d
PaPa d
in all countries.PaPa d d d
PaPa d
[Sep-2020] multipurpose
PaPad d organ
Pathat
Pa manages aPbusiness
d d d
aPa d and PaPdad
manages manager, and manages worker and work”.
laiai i i
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laiai i i
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(c) Production engineer (d) Mining engineer
Principles of Management
laiai laailai ai i ai i ai i i i ai i i i
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oo
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(b) creative management
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i i
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P Pa d a
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[Ans. (a) scientific management] (d) By experience of producers

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l
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a a a saaslaala management
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9. a saasaof
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d saaslaalare a saaslaala
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d
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ur
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laiai alailai [Ans.
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i aail(b)
i i i i i i i
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adas first management d a saasl s a
principles
d a a sl
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P Pa d a
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a
P Pa d a
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(a) Victor Meldrew (b) Charles (d) initiative [Ans. (c) increase in efficiency]
.s
laiai lsaailai Fayol saslaailai (d) Taylor

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PaHenry Fayol]
d d d
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l a a i i
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l a a l a i a i l a i i
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i i i
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d d 3 P1aPa 4
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.
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(a) Management is universal [Ans. (c) (i)-4; (ii)-3; (iii)-1; (iv)-2]

laiai aslaaila
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i laailan
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ur
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i i i i i i ilai i i
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laiai laaila
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laiai l a i a i l a i a i l a i a i l a i a i (b) 1 l a i 2
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saaslaala
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the correct answer using the codes

(d) 3 4 2 1
given below.
laiai laiai laiai laiai laiai la[Ans.
iai (a) (i)-4; l(ii)-3;
aiai (iii)-1; (iv)-2]
laiai
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daadsaIsa asaasal asaasal asaasal asaasal sasal
aPdaada as
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i) Body of knowledge 1) Training i) Rule of Thumb 1) Mutual trust
laiai i i i i programmes
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processing
laiai saaslaaworkers
i i i i ilai ilai ilai ilai i i
adsaasal d asaaslaala d asaaslaala da a l
sasa a
d a a l
sasa a
d a a l
sasa a
d a d a saaslaala as
d d
PaPa iv) Specialisation
PaPa d
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a d
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philosophy judgments
laiai i i
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saaslaala
a
P Pa d a
P Pa d a
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P Pa d a
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P Pa d PaPdad
laiai Kindly
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laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
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adsaasal d asaaslaala d a saaslaala d a da saaslaala d a saaslaala d a saaslaala d a saaslaala as
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2.1 Main Functions
.
laiai i i
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ailai Subsidiary
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saaslaala
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I. C hoose the C orrect A nswers . 5.
The goals are achieved with the help of ______
(a) Motivation (b) Controlling
s alsaailai s alsaailai s alsaailai s alsaailai s alsaailai salsaailai aailai
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a a d a a (c) Planning
da a d (d)
a d a as
PP a
P Pa d a
P Pa d a
P Pa d a
P a d a
P Pa d a
P Pa d PaPdad
P
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[Ans. (a) Motivation]
ab
[PTA-3; Mar.2020]
(a) Innovating (b) Controlling II. V i S hortalA Q uestions i i .
laiai laailai laailai i i
saaslaala
i ery
saaslaala
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sasaala
i
saaslaala
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saaslaala
adsaasal d a
(c)s
a as
Planning d a s
a as d a d a d a d a d a as
PaPa 1. WritePaaPshort d
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PaPaPlanning. PaPa d PaPdad
(d) Decision-making [Ans. (c) Planning] [PTA-3; QY-'19; FRT-'22]
ur
laiai laiai i i aailai Ans. i Planning

i refers ilaideciding inaadvance.
saaslaato
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adsaasal 2. adaWhich
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d a saaslaalais not a d
main
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P P a
P Pa d PPa a d
[QY-'19; a
P Pa
May-'22]
d is a constructive
a
P Pa d reviewing
a
P Pa d of future needs
a
P Pa d so PaPdad
that present actions can be adjusted in view of
(a) Decision-making (b) Planning
.s
the established goal.

laiai (c) laailai
Organising laailai (d) Staffing laailai laailai i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal a saas a s aas a saas a saas a a a as
d
PaPa d d d
PaPa [Ans. (a) P d
aPa d
Decision-making] PaPa 2. WhatPisaPmeant
d d da d by Motivation?
PaPa d d d
PaPa d PaPdad
Ans. The goals are achieved with the help of
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3. _________ is included in every managerial motivation. Motivation includesi increasing the i i

laiai aslaailai aslaailai ilai
aslaa[Aug-'21] aslaaila i aslaailai of aawork ai developing
aslaaland aslaala
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function.
a a d a sa d a sa d a sa speed ofdperformance
a sa d sa d a sa as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a d
P Pa on the part
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a the workers. a
P Pa d PaPdad
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(a) Co-ordinating (b) Controlling

3. List the subsidiary functions of management.
laiai (c) Staffing
ailai alailai (d) Organising a ilai iai i i i i i i
adsaasal a a
sasal
a sasa a a
sasal
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Ans. a saaslaala
Innovation a saaslaala a saaslaala as
PaPa
d d PaPad d [Ans. (a) PaPCo-ordinating]
da d d
PaPa d PaPad d PaPa d d d
PaPa d PaPdad
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(ii) Representation
4. Which of the following is verification (iii) Decision - making
laiai function?
l a i a i l a i a i l a i a i la i
saasal(iv)
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saaslaala
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Think Before laailaiAct‘ or 'Look
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[Ans. PaP a d
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provide a basis or logic for planning.
laiai i i
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saaslaala 13 i i
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saaslaala
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saaslaala
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saaslaala
a
P Pa d a
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laiai Kindly
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laiai to OurlaEmail
laiai laiai laiai
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III. S hort A nswer Q uestions . IV. L ong A nswer Q uestions .
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala aailai
saasl1. aslaailai i i
saaslaalaof management.
i i
saaslaala
adsaasal d a d a d a d a Explain
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functions
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a management. a
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[QY-'19; FRT-'22]
(any 5) [PTA-4; Sep.2020; Aug-'21; May-'22]
Ans.
Ans. The Functions of management can be classified into

laiai a ilamain
i functions a ilofi management a iarei : a ilai two categories. a ilai i i i i
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a PaPdad
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m
(iii) (i) Planning :
laiai lsaailaStaffing
i lsaailai lsaailai lsaailai l aailai laailaprimary
i i i
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adsaasal d a saa
(iv) Directing d a saa
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d a saa
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s Planning d a saasthe
is d function
a as
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of management. a
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laiai (vi) i
laala Controlling
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laala i i
laala i i
laala i laailaofi future needs ai so thatin present
laailadjusted iai
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d d PaPad d PaPad d PaPad d PaPad d PaPad d
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.
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PaPa d PaPa d PaPa
ood PaPa d PaPa d PaPa d PaPa
(b) Organsing function work is assigned
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(iii) Staffing :
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(a) Staffing function comprises the

laiai 2. State ilaithe importance ilaiof staffing.alailai ilai i i
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sa(i) a a l a
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Ans.
d
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PaPad d PaPad d of competent
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personnel. persons in the right jobs.

laiai l aailai l aailai l aailai l aailai (iv) aailai
Directing
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i
alai
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[QY-'19]
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a
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with sub-ordinates.
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and adequate remuneration of personnel. notice–boards,

laiai aslaailaThe i aslaaofilai any enterpriseaslaailai dependsasaaslaailai aslaailamechanism,
i aameeting,
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function. (i) Innovation :

laiai i
a i i i i i i i (a)i Innovation
i refers
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adsaasal 3. asaa
d slala the employees
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the changes business

Ans. Employees are kept informed of all necessary world.
laiai matters
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adsaasal a saa s
newsletters, a saaslnotice-boards, a saaslaailai meeting,asaaslaailai a saaslaailanew
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techniques
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laiai goals.
la ai i la ai i la ai i la ai i la aand
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laiai to OurlaEmail
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laiai i i
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customers, ilaisuppliers, government (a) Communication is the transmission i i
laiai laailai laabanks, laailai i i
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laiai i i have good i irelation with others.
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a saaslaala a saaslaala a saaslaala a alai
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co
has to take a number of decisions it is to be done.
laiai laailai laailai laiai laiai i i
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saaslaala
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aas aday.
s asaasal asaasal a a a as
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PaPa d d
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PTA Questions and Answers
.
laiai lailai ilai
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i i
sa.aslaala aslaailai i i
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2 M arks 3 M arks
Functions of Management
laiai laiai aslaailai i i
saaslaala[PTA-4] dad1.
i i
saaslaala aailai duties of
saaslmain
ilai
saasalaamanager?
i i
saaslaala
adsaasal 1. adaWhat
adsaasaisl meantadby
a sControlling?
a d a What areathe
d d a d a as
PaPdad
PP P Pa d PaPa d
oo
PaPa PaPa d PaPa d PaP a d
[PTA-4]
Ans. Controlling is performed to evaluate the Ans. (i) A manager has to act as representative of a
performance of employees and deciding company.lailai
laiai aslaailai laailai i i
saaslaala laiai ilai
saaslaawith
i i
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adsaasal dincrements
a sa and
d a s
a apromotion
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d as
a d
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P Pa d a
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facilitates
a
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ab
synchronization of actual performance with financial institutions, trade unions, etc.

i i i i
predetermined standards. i i i i i ai ai i i i i i
salaala
adas salaala
a as salaala
a as salaala a as salaal(iii)a as It is the
a saaduty saaslaala to havedagood
slalaof everydmanager
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PaPdad PaPdad PaPdad PaPdad d d
relations
PaPa with others. PaPa d PaPa d PaPdad
Government Elaxam Questions and Ai nswers

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laiai aslaailai aslaailai asailai aslaailai saaslaala

i i i
saaslaala
i i
saaslaala
adsaasal d asa d a s
a d a s
a d asa d a d a d a as
a d a d
Pahoose the PCPorrect
I.P C a a d
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A nswers a d a
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a d a d
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Q uestions a
P Pa d PaPdad
.s
1 M ark 5 M arks
ailai a ilai a ilai a ilai lailai a ilai ailai i i
a l
adsasa a
1.PadaWhich
l
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d a a l
sa
scorrect?
a d a a l a
sasa [QY-'19] dadsasa d a a l
sasa da a l
sasa da saaslaala as
P P Pa d PaPa d PaPa 1. Explain
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a Planning P(ii)
d aPaCo-ordination
d PaPa d PaPdad
(a) The process of placing the right man on the [FRT-'22]
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right job is called placement. (i) Planninga: i i

laiai (b)
ilai
asAlaamanager has ato ilai
laaact aslaailai of a asaaslaailai
as representative saaslalisa the dprimary
i i
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P Pa d a
P Pa d a
P Pa d a
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management. Nothing can be performed
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(c) The goals are achieved with the help of without planning. (For eg., Writing a book
motivation.
laiai l ailai l a ilai l a ilai l a ilai starts with ilai
saaslaaplanning).
i i
saaslaala
i i
saaslaala
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a a
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d a a a
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planning d a a
sasa d a d a d a as
d
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(b) Planning d
PaPa reviewingPof d
aPafuture PaPdad
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without
planning] needs so that present actions can be adjusted
2. Subsidiary in view of the established goal.
laiai lsaailai function lsofaailamanagement
i lsaaare:
ilai lsaailai lsaailai aslaailabefore
i i i
saaslaala
adsaasal da saa
d a saa
d a saa
[FRT-'22] d a saa (c) Planning
d a saa should take d a splace
a doing;
d a as
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most
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(a) Innovation (b) Representation
by determining before any operative action
(c) Decision making (d) All the above
laiai alala i i alala i i laalaabove] saslaala takes place,
i i i i laailawhat
i shall beadone,laailai where, how alailai
adsaasal dasasa dasasa [Ans. (d)dAll asaasthe da a asaasshall
anddwho do it. dasas dasasa as
PaPad PaPad PaPad PaPad PaPad PaPad PaPad PaPdad
laiai i i
saaslaala
i i
saaslaala
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saaslaala
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saaslaala
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saaslaala
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saaslaala
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d a d a d a d a as
a
P Pa d a
P Pa d a
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P Pa d a
P Pa d a
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laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
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laiai a
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i i
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l a a i i
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l a l ai ai (or l a i a i (iii) aslaailai and co-ordination,
saStaffing
i i
saaslaala
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of all individuals, working in the enterprise
(v) Motivation and co-ordination and
laiai a ilaini different acapacities;

a ilai so as to ilead to the
a i a ilai aslaailai aslaailai i i
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l
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PaPa d PaPa
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m
(b) Co-ordination is included in every managerial
the size of organisation.
laiai lsaailafunction;
i lsaailai lsaailai lsaailai ai i
slala
i i
saaslaala
i i
saaslaala
adsaasal d a saa
Eg: (i) Planning
d a saa
and a saa
co-ordination,
d d a saa (d) Th
d aesaadifficulty of co-ordination
d a is increased
d a as
a
P Pa d a
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P Pa d a
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P Pa d a
P Pa d a
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with the increasing size of the organisation.
co
laiai i i
saaslaala
Ai dditional
saaslaala
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saaslaala
i i and A
saaslaala
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PaPI.aC hoose the d
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d
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related PaPa d PaPdad
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.
laiai ailai laailorrect i i i i (c) Directing (d) Controlling lailai
adsaasal i.dasaaC
slahoose saasC ai saaslaala . saaslaala aslaailai aslaailai
ks
the option a
a d a d a
d a d a
d a d a
d adad a sa a s
PaPdad [Ans. (c)
a
PaPdaadsasa
Directing] as
PaPdad
Pa Management
P1. P Pafunctions are a
P Pcalled as P Pa PP
9. Coordinating people and human resources to
(a) Managerial Process accomplish organizational goals is the process
laiai aslaailaiCyclical aProcess
(b) ilai i i i i of i i i i i i
adsaasal d a sa(c) saaslaaProcess
Psychological
d d asaaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala as
PaPdad
PaPa d PaPa d PaPa
oo
d PaPa d (a)PaP d
Planning
a d
PaPa (b) Directing PaPa d
(d) Accounting Process (c) Management (d) Leadership
[Ans. (a) Managerial Process] [Ans. (d) Leadership]
laiai 2. sa lsaailai can besaperformed
Nothing ai i
slala without i i
saaslaala aailai
saasl10. aailai
aslthe aslaailai be included iai
saaslaalin
adsaasal d a a d a a d a d a Which d a of
sa following
d a sawould d a as
a
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a
P Pa d (b)
a
P Pa d Staffing a
P Pa d
the
aPa d
P "Controlling a
P Pa d
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a
P Pa d PaPdad
www.Padasalai.Net
ab
(c) Planning (d) Controlling

[Ans. (c) Planning] (a) Measuring results against corporate
laiai lsaailai a ilai throughalailai i i objectives
alailai i i i i
adsaasal 3. asa
d a Consumers are
d a satisfied
a
sasa l
d a sasa d a saaslaala (b)PaPdaadsasa routines
Explaining d a saaslaala d a saaslaala as
d
PaPa (a) coordination
PaPa d d
aPamotivation PaPa
P(b) d PaPa d PaPa d PaPdad
(c) innovation (d) representation (c) Setting standards
ur
i i [Ans. (c) innovation] (d) Giving assignments

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(a) Budgeting (b) Profit earning 11. Specific, shortterm statements detailing how
.s
(c)ai Staffing (d) Planning to achieve lan

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i
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6. Co-ordination means 12. An outline of the fundamental purpose of an

(a)ai Organising activities organisation i isi called its alailai
laiai aslala i
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saaslaala
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activities
(d) All of these (c) Policy (d) All of the above
[Ans.la (c) Synchronizing [Ans. (a) Mission statement]
laiai lailai
asailaidirecting aactivities]
aslaailcontrolling
i aailai
saasl13. laailai aslaabyilai i i
saaslaala
adsaasal 7.d a sa as a
Planning, d a s
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laiai (b) Goals of management
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laiai i i
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saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
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Chapter
3
laiai
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d
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a d
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a
d
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saaslaala MANAGEMENT
a d
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a
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saaslaala OBJECTIVES
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d
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a d
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(MBO) MANAGEMENT BY ai i
laiai i i
saaslaala
i i
saaslaala l ailai l a ilai l a ilai l a ilai l a
adsaasal d
PaPa
a
d d
PaPa
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d PaPdad
a
asasa
EXCEPTION
PaPdad
a
asasa
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a
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(MBE)
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a
asasa asaasal
PaPdad
as
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m
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co
laiai i i
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saaslaala
i i
saaslaala
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saaslaala
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saaslaala
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CHAPTER SNAPSHOT
.
laiai i i
saaslaala l ai ai i i
saaslaala
i i
saaslaala
i i
saaslaala
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saaslaala
i i
saaslaala
adsaasal saasal
ks
a
P Pa d a
P Pa d a a d
3.1 P PMeaning a
Pa d
andPDefinition a
P Pa
of MBO
d a
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3.2 Objectives of MBO
laiai i i
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saaslaala
i i i
saaslaalaof MBO
Features i i
saaslaala
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saaslaala
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saaslaala
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PaPdad
PaPa d PaPa d d
oo
3.4 PaPProcess
a PaPa
of MBO d PaPa d PaPa d PaPa d
3.5 Advantages of MBO
laiai i i i 3.6
i Disadvantages
i i of MBO i i i i i i i i
adsaasal d a saaslaala d a saaslaala d a saaslaala d a saaslaala da saaslaala d a saaslaala d a saaslaala as
a
P Pa d a
P Pa d 3.7 a
P Pa d
Meaning of MBE
a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net
ab
3.8 Process of MBE

laiai i i i 3.9
i Advantages i i of MBE alailai i i i i i i
adsaasal a saaslaala a saaslaala3.10 a saaslaala
Disadvantages adsasa a saaslaala a saaslaala a saaslaala as
d
PaPa d d
Pa a
P d d
Pa a d
P Pof
adaMBE P
d
PaPa d d
PaPa d d
PaPa d PaPdad
ur
laiai
adsaasal a d
P Pa
a
d
i i
saaslaala
a d
P Pa
a
d
i i
saaslaala
a d
P Pa
a
d
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saaslaala EPxercise i i
saslaala
aPdaada a d
P Pa
a
d
i i
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a d
P Pa
a
d
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d
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I. C hoose the C orrect A nswers . 4. Delegation of Authority is Easily Done with
.s
laiai aslaailai
1. s___________ System i i
saaslaala gives dfull laailai to the saslaailai the Helpsaof
saasScope laa__________
ilai . i i
saaslaala
[QY-'19] i i
saaslaala
adsaasal d a a d a a d a a (a)PaP
MBM
d a a s (b) MBE d a d a as
d
PaPa Individual d
Strength
PaP a and P d
Responsibility.
aPa PaPa d a d PaPa d PaPa d PaPdad
(c) MBO (d) MBA [Ans. (c) MBO]
w
(a) MBO (b) MBE [PTA-5]

laiai (c) i MBM i (d) aMBA i i [Ans. i (a)
i MBO] alaailai aslaailai ilai i i
adsaasal d a saaslaala d a saslaala d a saaslaala d a sas5. MBOdis a sapopularised d aaslaaUSA
inasthe d a saaslaala
by .............. as
a
P2. d
Pa Which isPthe a d a
PaFirst step inPProcessPa d of MBO? a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(a) Prof. Reddin (b) George Odiorne
w
(a) Fixing Key Result Area

(b) Appraisal of aActivities (c) Henry Fayol (d) F.W Taylor ai i
laiai laaila i laailai laailai laailai laailai laailai l a
adsaasal aas as s
ada s s
ada as aas as s
daada
as s as
daada(b) George adsaasal as
PaPdad (c) Matching PaPdaResources PaPdaActivities
with PaPdad PaP Pa[Ans. a dOdiorne]
a PaPdad
w
P P P
(d) Defining Organisational Objectives
II. V ery S hort A nswer Q uestions .
[Ans. (d) Defining Organisational Objectives]
laiai l ai a i l a i a i l a i a i la i
alai Whatdare laailaobjectives
i asla i
alai
i i
saaslaala
adsaasal asal
3.daadsa__________ d a saasal Management
keeps d a saasal Alert dtoadsaas1. a saasthe d a sof
a MBO? d a as
a
PP a
P Pa d a
P Pa d a
P Pa a
P Pa d a
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Opportunities and Threats by Identifying Ans. The objectives of MBO are ;
Critical Problems. (i) to measure and judge performance.
laiai i
aslaala i i
laala i i
saaslaala
i i i laailai individual
saaslaala (ii) dtoadsaasrelate
i i
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iai
saaslaalto
adsaasal d a sa(a) MBA d(b) a saasMBE d a d a d a d a as
PaPa d PaPa d PaPa d PaPa d PaPaorganisational PaP d
goals.
a PaPa d PaPdad
(c) MBM (d) MBO [Ans. (b) MBE]
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 20 i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
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saaslaala
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aPa d XIIPStd d
2. Bring out the meaning of MBE. (iv) If actual performances deviate significantly,
laiai sala ilai l a i a i
[Govt. MQP-'19; l a i a i
PTA-5] l a
saasala
i i the issue ilai to be passed
saaslaaneeds
i i
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i i
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adsaasal d a a sa d a saasal d a saasal d a d a d a a as
Ans.
a d
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a a
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Pmanagers, a
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a
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principle of managerial control suggested by (v) Finally, the aim is to solve this "exception"
the classical writers on management. immediately.
laiai laailai laailai laailai laailai ai i
slala process laailai i i
saaslaala
adsaasal d a s
(ii)aas It is a style
d a s
ofa abusiness
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management
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3.aas List out dany
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of d a as
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Ans. Four process of MBO are
m
that deviate from the norm. (i) Defining Organisational Objectives.
laiai 3. Mention l a ilai any two advantages
l aailai of MBO. l aailai l
s a
aail(ii)
i Goals of ilai
saaslaaEach Section.
i i
saaslaala
i i
saaslaala
adsaasal d a saas a d a sa as d a saas d a saa
d a d a d a as
a
Ans. d
P PaThe advantages a d
a MBO are P Pa
P Pof a d a
P Pa d a d
Pa Key Result
(iii) PFixing a a d
P PAreas. a
P Pa d PaPdad
co
(i) MBO gives the criteria of performance. It
IV. iLiong A nsweri Q uestions .
laiai laahelps
ilai to take corrective
laailai action. laailai laala laalai i i
saaslaala
i i
saaslaala
adsaasal a a a a a
Management by Objectives (mbo) Managemnet by Exception (mbe)

d a s
(ii)a s MBO a
process
d sa s helps thed a s s
managers
a to d a sa s d a sa s d a d a as
PaPa 1. WhatPaP d
a the major
are
d
PaPadvantages
a PaPMBO?
of a d PaPdad
understand their role in the total organisation.
(any 5) [PTA-5]
.
4. What is known as KRA?
laiai ilai aslaailaresult
i ai i Ans. ai Thei advantages iofiMBO are alailai i i
adsaasal saaslaaKRA slalaResult dadsaaslala saaslaala saaslaala
ks
Ans.d(i)
a meansd a sKey
a areas.
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a
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objectives premises. at various levels of management under MBO
(ii) ala Key
ilai Result Areas and this commitment ensures hard work toai i
laiai laaare
ilai arranged on laaailapriority
i laailai laailai laailai l a
adsaasal aas s a aas as s
ada as s
anaPdaada
as achieve s a
a a them. adaada
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oo PP
organisation. (ii) MBO process helps the managers to
(iii) The understand their role in the total organisation.
laiai ilai examples ofaKRA
lsaastanding, aailai
are profitability,
aailai
market
aail(iii)
i ilai laailai for planning i i
adsaasal d a saa innovation
d a sa sl etc. dadass a l
d a saasl a Manager
d a saaslaarecognises d the
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a
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P Pa a
P Pa d a
Pand d
Paappreciates Pthe a d
Paplanning. P Pa a d PaPdad
www.Padasalai.Net
ab
III. S hort A nswer Q uestions .

(iv) MBO provides a foundation for participative
laiai 1. Writelathe i features of MBO.
i [QY-'19; Mar-2020]
i i i management. i i ilai also involved i i
saaslaala Subordinates saaslaaare
i aala i i
adsaasal Ans. d a
The
ala
saasfeatures of MBO
d a saaslare : d a saaslaala d a saaslaala d a d a d a saaslaala as
PaPa d PaPa d PaPa d PaPa d PinaPgoal
a setting. PaPa
d d PaPa d PaPdad
(i) An attempt is made by the management (v) A department does not work at cross purpose
ur
to integrate the goals of an organisation with another department.ai i

laiai ilai individuals.
aslaaand ilai will leadato
aslaaThis laaileffective
ai aslaailai aslaailai slalMBE?
a ai i
slala
adsaasal d a sa d a sa d a sa s d a s
2.a What are
d a sthe
a advantagesd a saaof (any
d a saa5) as
a
P Pa d management. a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
[PTA-3; Mar-2020]
(ii) MBO tries to combine the long run goals of
.s
an Ans. Management by exception provides the following

laiai a ilaiorganisation awith
ilai short runagoals. a ilai iadvantages.
i i i i i i i
adsaasal d(iii)
a a l
sasaManagement d a a l
sa to relate d
satries the
a
l
sa
saorganisation d a saaslaala d a saaslaala d a saaslaala d a saaslaala as
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PaPa they
because PaPdad
goals with society goals. P
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deal only with exceptional matters. Routine

(iv) MBO‘s emphasis is not only on goals but
laiai ilai on effective ilai problems are left to subordinates.
adsaasal a saaslaaalso a sa aslaaperformance. a saaslaailai a saaslaailai a saaslaailai a
i i
saaslaala a
i i
saaslaala as
a d
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a
P Pad d attention ona
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d PaPdad
(v) It increases
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achieving goals at all levels. problems. As a result, there is better utilisation

of managerial talents and energy.
laiai (vi)alaAims ilai at replacing laailathe
i exercise of laaauthority
ilai laail(iii)
ai It facilitates i i laailaauthority.
i i i
adsaasal d a sa s awith s a
consultations.
d a a s d a saas d a saas d a saaslaala delegation d a saasof d a saaslaala
Top as
PaPa d PaPa d PaPa d PaPa d aPa d
Pmanagement PaPa d
concentrates aPa d
on Pstrategic PaPdad
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2. What are the Process of MBE? decisions and operational decisions are left
Ans. (i) Primarily, it is necessary to set objectives or to the lower levels.
laiai ilai with predictable
aslaanorms aslaailai or estimated aslaailaresults.
i aslaail(iv)
ai laailai i i
saaslaala important
i i
saaslaala
adsaasal d a sa d a sa d a sa d a sa It is
d a asaatechnique
s ofdaseparating d a as
a
P Pa d
(ii) These performancesa
P Pa d are
PPa d
assessed
a and get a
P Pa d aPa d
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fromPunimportant PP
one.
a a d
It forces PaPdad
equated to the actual performance. managers to review past history and study
(iii) Next, the deviation gets analysed. iWith an related business iai data for identifying deviations.lailai
laiai i i
saaslaainsignificant
la i i
aslaanola deviation, i
aslaaaction
la aa i
is dadsaaslal(v)
i
saaslaalmanagement aslaailai
adsaasal d a d a sor
a d a sano MBE d a keeps d a saalert to opportunities
a
daadsasa as
PaPa d P
required and
a a d
P senior managers P a a d
P can concentrateP P a a P a a d P
P threats by identifying a
P a d P aP PaPdad
and critical problems. It
on other matters. can avoid uninformed and impulsive action.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
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saaslaala
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laiai i i
saaslaala
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saaslaala
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saaslaala
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saaslaala
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Pa Std - Commerce
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(vi) Management by exception provides better (ii) Furthermore, it takes time to pass the issues
laiai ai yardsticks
i for a judging
i i results. aIt
i iis helpful a i i aslaailai
to smanagers. i i i i
adsaasal d a
l
saasal a
d a
l
saasal a
d a
l
saasal a
d a
l
saasal a
d a a d a saaslaala d a saaslaala as
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a
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P Pa d (iii)a d
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3. Discuss the disadvantages of MBE. normal procedures.
Ans. (i)ai iThe main disadvantage of MBE is, only ai i (iv) Because i ofi compliancealfailures
ilai are considered
laiai lala laailai laailai saaslala saaslaala to manage sasaaand aailai
saaslfind
adsaasal d a saas managers
d a saa
haves the power over
d a saa
really
s important
d a ddifficult
a d a typically
d a as
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PaPa which canPabe
decisions,
d
Pademotivating PaPfor
a d PaPa d PaPa d PaPa d PaPdad
themselves with limited job duties and
m
employees at a lower level. ultimately dismissed/terminated.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal Questions P PA
d a d a PTA
d a d a and a
a nswers
d d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a d a
P Pa d a
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co
laiai
adsaasal
I. V ery
a
i Si hort A nswer
saaslaala a
i i Q uestions
saaslaala a
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saaslaala a
aslaailai
sa a
i i
saaslaala a
i i
saaslaala
2 M arks
a
i i
saaslaala as
1.d d d d d d d d d d d d d d PaPdad
Pa Define - MBO.
Pa PaPa PaPa PaPa PaPa PaPa PaPa [PTA-5]
Ans. Professor Reddin defines MBO as "the establishment of effective standards for managerial positions and
.
the iperiodic conversion of those intoi measurable timei bound objectives linked vertically and horizontally
laiai i
aslaalawith aslaailai aslaalai aslaalai aslaailai aslaailai saslaala
i i
adsaasal
ks
ad da s
aand future
a
ad d
splanning".
a a
ad d
sa a
ad d
s a a
ad d
sa a
ad d
s a adada as
P Pa P Pa P Pa P Pa P Pa P Pa P Pa PaPdad
Government Exam Questions and Answers
laiai aslaailaSi hort Aanswer i i
saaslaala Questions
ilai
saas.laa2
i i
saaslaala (iii) dFixing
ilai Result Areas
saaslaaKey
i i
saaslaal:aKey result areas ilai
saaslaaare
adsaasal I.daVsaery d d a M arks
d a a d a d a as
PaPdad
PaPa d
1. What do you
PaPa d
mean by MBO?
PaPa d
oo PaPa d
[QY-'19]
d
PaPafixed on the basis d
PaPaof organisational d
PaPobjectives
a
premises. Key Result Areas (KRA) are arranged
Ans. (i) MBO is a management system in which on a priority basis. KRA indicates the strength
laiai lsaailaieach member ilathe
lsaaof i organisation lsaailaeffectively
i lsaailai of
ilai
aslaaorganisation.
san saaslaala
i i i i
saaslaala
adsaasal d a saa
d a saa
d a saa
d a saa
d a a d a d a as
a
P Pa d a d
participates
P Pa and involves a d
P Pa himself. P Pa a d a d
P PaSetting Subordinate
(iv) a d
P Pa Objectives PP a d
oraTargets: PaPdad
www.Padasalai.Net
ab
(ii) This system gives full scope to the The objectives of each subordinate or
individual are fixed. It is ipreferable to fix the
laiai laailaiindividualsastrength
laailai and responsibility.
laailai laailai laailai at lower level i
laainlaquantitative ai i
slala
adsaasal d a saa
(iii)
s MBO harmonises
d a a s the goal
d a saa
ofs an individual d a saas d a aa
objectives
s s d a saas d a saaunits. as
PaPa d aPa
withPthe
d
organisation's
d
PaPgoal.
a PaPa d d d
PaPaThere shouldPbeaPaafree and frank d
PaPdiscussion
a PaPdad
between the superior and his subordinates.
ur
II. L ong A nswer Q uestions . 5 M arks (v) Matching Resources lwith ilai Objectivea:laThe
laiai aslaailai aslaailai aslaailai aslaailai aslaailaiare framed asaathe sasala
i i
adsaasal 1.d a saExplain the a s
process
d a of MBO. d a s
(any
a 7) [QY-'19] d a sa d a s
objectives
a d a son
a basis of availability
d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a d
P Paof resources. P a
If P
a d
certain resources
a a d
P P(technical PaPdad
Ans. The process of MBO is explained below : personnel or scarce raw material) are not
.s
laiai (i)laiaiDefining Organisationali i Objectives: i i Initially, i i adequately i i available,alathe i i objectives aoflaian i

adsaasal d a saasal organisationald a saaslaalobjectives
a
d a
laala
saasframed
are by the
d a saaslaala d a saaslaala
organisation are d a sasala accordingly.
changes d a sasala as
PaPa d PaPa d Pa a d Pa a d PaPa d PaPa d PaPa d PaPdad
top level employees of P an organisation. P The (vi) Periodical Review Meetings : The superior and
w
definition of organisational objectives states subordinates should hold meetings periodically

laiai l a i i
saasal why thedabusiness
a l a i i
saasal is started
a andl ai i
sal exists. dadsaasal
a l a i a i aslaailai they discuss
in swhich ilai progress in
saaslaathe
ilai
saaslaathe
adsaasal d a d a saa d a a d a d a as
a d
P Pa (ii) Goals P Pof
a d
a Each Section d
P Pa : Objectives
a P Pfor
a a a
P Pa accomplishment
d a
P Pa of
d objectives. a
P Pa d PaPdad
w
each section, department or division are (vii) Appraisal of Activities : At the end of the
framed on the ibasis of overall objectives of fixed period for achieving the objectives,
laiai laailaithe organisation. laailai
laalai Goals orsasobjectives laailai ilai
saaslaashould
there aslaailai between
be aasdiscussion
ilai
saaslaathe
adsaasal d a saas d a saas d a a are
d a saas d a d a d a as
PaPa d d
PaPa in a meaningful
expressed d
PaPa manner. PaPa d d
PaPasuperior andPsubordinates.
aPa d PaPa d PaPdad
w

laiai ai i aslaailai A nswers
slala the dCadsorrect
i i i i i i
saaslaa.la1 M arkdadsaaslaala saaslaala
i i
saaslaala
i i
saaslaala
adsaasal Csaa
I.daad hoose a d a d a d a da as
a
PP a
P Pa a
P Pa d a
P Pa a
P Pa d a
P Pa d a
P Pa d PaPdad
i. Choose the Correct Answers.
laiai 1.What
laailai is MBO?saslaailai i i i i i i i i i i
adsaasal d asaa
(a)
s Managerial
d a Business
a objects
d a saaslaala (b) Management
d a saaslaala by objectives
d a saaslaala d a saaslaala d a saaslaala as
d
PaPa (c) Management d
PaPa by organisation
PaPa d aPa d
(d)P Management
d
PaBusiness
of Pa PaPa d
organisation PaPa d PaPdad
[Ans. (b) Management by objectives]
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 22
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
UNIT II FINANCIAL
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i i i i i
MARKETS
alailai alailai
– Ialailai i i
adsaasal asaaslaala a saaslaala asaaslaala asasa asasa asasa a saaslaala as
d d Chapter
d d d d PaPdad PaPdad PaPdad d d PaPdad
4
PaPa PaPa PaPa PaPa
INTRODUCTION TO
m
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a d a d a d a d a d a d a d PaPdad
FINANCIAL MARKETS
P Pa P Pa P Pa P Pa P Pa P Pa P Pa
co
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal
ks
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
CHAPTER SNAPSHOT
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a da saas d a d a d a d a d a as
PaPdad
PaPa d PaPa d d
PaPMeaning
4.1 a
oo aPa d
andPDefinition
d
PaPa Market PaPa
of Financial
d PaPa d
4.2 Scope of Indian Financial Market

laiai i i
saaslaala
i i
saaslaala
i i
saaslaaoflaFinancial
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a d a 4.3 Types
d a d aMarkets da d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net
ab
4.4 Role of Financial Market

laiai i i i 4.5
i Functions i i of Financial Markets
i i i i i i i i
adsaasal d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala as
PaPa d PaPa d d
PaPNew
4.6 a Issue Market d d
PaPa (NIM) Vs. Secondary
PaPa PaPa
Market
d PaPa d PaPdad
ur
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal as
E
d a d a d a d a d a d a d a
a
P Pa d a
P Pa d a
P Pa d a d
xercise
P Pa a
P Pa d a
P Pa d a
P Pa d PaPdad
.s
laiai I. Cahoose
i
alalai the C orrect
alalai A nswers i
a. lalai i i i
saa3.slaala Primary market i i
saaslaalais also called aaila[PTA-5;
saaslas
i FRT-'22] i i
saaslaala
adsaasal d sasa dasasa dasasa da d a d a da as
PaPad PaPad PaPad PaPa d aPa d
(a) PSecondary market d
PaPa (b) MoneyPamarket Pa d PaPdad
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1. Financial market facilitates business firms (c) New Issue Market (d) Indirect Market
laiai (a) ilairise funds alailai i i i i i i [Ans. (c)aNew i i Issue Market] i i
adsaasal d a saaslaaTo d a sasa d
[PTA-3;
asaaslaalaFRT-'22]dadsaaslaala d a saaslaala d a saslaala d a saaslaala as
d
P Pa (b) To recruit
a a d
P Pworkers
a a
P Pa d a
P Pa 4. SpotP Market aPa d a
is a market d
P Pa where the Pdeliverya
Pa d of PaPdad
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(c) To make more sales the financial instrument and payment of cash
laiai (d)laTo i iminimize fund i requirement
i i i i ioccurs alailai [PTA-1; FRT-'22]
aslaailai i i
adsaasal a saasala a saaslaala a saaslaala asaaslaala (a) Immediately
a sasa a s(b)
a In the a
futuresaaslaala as
PaPa
d d PaPad d [Ans.
PaP(a)
da To rise funds]
d PaPa d d PaPa d d d
PaPa d PaPad d PaPdad
w
(c) Uncertain (d) After one month

2. Capital market is a market for [Sep-2020]
[Ans. (a) Immediately]
laiai alailai [Govt. MQP a&i QY-'19;
i ; PTA-4; a ilaMay-'22]
i aailai aailai ilai ai i
adsaasal d a sa s a d a saasl a l a
d a saasl a d a saa
5.
l
s How many d a saa l
stimes a securityd a saaslaacan be sold
da saa slaala
in as
a
P Pa d(a) Short Term
a
P Pa dFinance a
P Pa d a
P Pa d a d
P Pa market? P Pa
secondary
a d a
P Pa d PaPdad
(b) Medium Term Finance
[PTA-6; Aug-'21; FRT & July-'22]
laiai (c) laLong
ilai Term Finance ilai ilai ilai ilai ilai i
adsaasal a a
sasaBoth ShortdTerm a a l a
sasaand Medium a a l
saTerma a l a
sa Financedadsasa (a) Only a sone
a l a
satime a aslaaTwo
s(b) time asaasla alai as
d
PaPa d(d) PaPa d PaPad d PaPa d d a d d
aPa times PaPa (d) Multiple a d d
PaPtimes
a PaPdad
(c) PThree
[Ans. (c) Long Term Finance]
[Ans. (d) Multiple times]
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
PaPa Sura’sPaXII
d d d
Pa Std - Commerce
d d
PaPa d d
PaPa d d
PaPa d d
PaPa d d
PaPa d PaPdad
II. V ery S hort A nswer Q uestions . sectors, financial institutions like banks,
laiai aslaailai are the aailai
saaslcomponents ai i
slalaorganized
i i
saaslaala insurance i i
saaslaala sectors,
i i
provident
saaslaala funds and ilai
saaslaathe
adsaasal 1.daadsaWhat d a d a saaof d a d a d a d a as
a
PP a
P Pa d a
P Pa d a
P Pa d a d
P Pagovernment P a d
asPaawhole. a
P Pa d PaPdad
sectors? [FRT-'22]
Ans. Organised sector consist of Regulators, Financial (ii) With the help of the financial market all
UNIT II  Chapter-4
laiai i
aslaala i
saInstitutions,
i i
saaslaalmarkets
Financial a andaFinanciali i
saaslaala services.
i
saaslaala
i thesaaboveai i stated individuals,
slala
i i
saaslaala institutions i i
saaslaala
adsaasal d a d a d d a d a a d a d a as
Pa d
Pa What is Spot
2.
d
PaPaMarket? PaPa d PaPa
[FRT-'22]
d d
PaPaand the Government d
PaPa can get their d
PaParequired PaPdad
funds in time.
m
Ans. Spot Market is a market where the delivery of
the (iii) Through the financial aailai marketsalaathe
laiai
adsaasal a saaslaailafinancial
i instrument
a sa aslaailai and apayment saaslaailai of cashasaaslaailai s aslaailai get their
institutions
a a a saaslshort term asa well
a
iai
s las as
a d
P Pa d occurs a
P Pad
immediately.
d i.e. a
P Pad
settlement
d is completed
a
P Pa d d a d d
P Palong term financial a d d
P Pa assistance.P Pa a d d PaPdad
immediately.
co
(iv) It leads to the overall economic
laiai 3. What ailai is Debt Market? a ilai a ilai a ilai i i i i i i
adsaasal Ans.
d a a l
sa Marketdis
saDebt a a
sathel
safinancial dmarket a a l
sasa for trading d a a
sasal
d a saaslaala
development.
d a saaslaala d a saaslaala as
in Debt Instrument (i.e. Government Bonds or IV. L ong A nswer Q uestions .
Securities, Corporate Debentures or Bonds).
.
laiai aslaailaiis price adecided i i
saaslaala in a Secondary
i i
saaslaala Market? aailai Distinguish
saasl1.
iai
saaslaalbetween New aailai Marketsand
saaslIssue aslaailai
adsaasal
ks
4.dasaHow d d a d a d a d a d a a as
a d
P Pa a
P Pa d a
P Pa d a
P Pa
[Aug-'21]
d Secondary
a
P Pa d Market. PPa(anyd
a 5) a
P Pa d PaPdad
Ans. Secondary markets allow for the determination of [Govt. MQP-'19; PTA-1; Sep-2020; FRT & July-'22]
laiai the ipricei of the traded i ifinancial asset through
i i the alAns. i i i i i i i i
adsaasal a saaslaala a saaslaala a saaslaala a sasaala a saaslaala a saaslaala a saaslaala as
PaPa interaction
d ofabuyers and P
d sellers.
aPa They provide
d PaPaad d d d PaPdad
d PaP d
oo
d d S.
d
aPa for
PBasis d
aPa Issue
PNew aPa d
PSecondary
signal for the allocation of funds in the economy, No Comparison Market Market
based on the demand and supply, though the
laiai aslaailai ilai
saaslaaprice aailai
saaslprocesses
ilai Meaningalailai The market
saaslaa1.
i i
saaslaala Thedaplace
i i
saaslaala
adsaasal d a samechanism called
d a discovery
d a d a d a sasa d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d place
a
P Pa for
d where
a
P Pa d PaPdad
www.Padasalai.Net
ab
III. S hort A nswer Q uestions . new shares is formerly

1. Give called primary issued
laiai laailathe
i meaning laaofilaFinancial
i Market.
laailai laailai laailai market.s(Initial
aslaailai securities i i
saaslaala
adsaasal
d a saa s d a sa as d a saas [July-'22]
d a saas d a saas d a a d a as
PaPa d PaPa d PaPa d PaPa d PaPa d d
PaPa Market) Pare
Issues d
aPatraded PaPdad
Ans. Meaning : A market wherein financial instruments
is known as
ur
such as financial claims, assets and securities

laiai Secondary
adsaasal a saaslaailtraded
are ai is known
a sa aslaailaas i a 'financial
a saaslaailmarket'.
ai In sala
a a s a
ilai
a saaslaailai a saaslaailai market. a
i i
saaslaala as
a d
P Pa d another words,
a
P Pad financial
d markets
a
P Pad d may be channels
a
P Pa d d a
P Pa d d a
P Pad d aPa
d
P(Resaled PaPdad
through which flow loanable funds directed from
Market)
.s
a supplier who has an excess of assets toward a

laiai aslaalai
sademander
i i
aslaala
whoasexperiences i i i
saaslaaoflafunds. dadsaaslaa2.
a deficit i i i i
la Buyingasaslaala Directasaslaala Indirect i i i i
saaslaala
adsaasal d a d a d a d a d a d a as
Pa d
Pa Write a note
2.
d
PaPaon Secondary a d
PaPMarket. PaPa PaPa
3. Financing
d aPa d
ItPsupplies
d
PItaPdoes
a not PaPdad
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[PTA-2; QY-'19; FRT-'22] funds to provide

laiai Ans. (i) a i iSecondary market
a i i may be defined
a i i as the a i i a i i budding a i i fundingalto i i
adsaasal d a
l a
saasal marketdfor a
l
saaold a
sal securities, d a
l
saasthe
in
al a
sense that
d a
l
saasal a
d a
l a
saasal enterprises d a
l
saasaand l a
d a sasaala
companies. as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
securities which are previously issued in also to existing
w
the primary market are traded here. companies for

laiai (ii)
l a ilaiThe tradingaltakes a ilai place between l a ilaiinvestors alailai l ailai expansion ilai
saaslaaand
i i
saaslaala
adsaasal d a a
sasa d a sasa d a a
sasa d a sasa d a a
sasa d a d a as
PaPa d d
whoPaPfollow
a d
PaPa issue inPaPthe
the original a d PaPa d PaPa d
diversification. PaPa d PaPdad
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primary market. 4. Buying Company and Investors

laiai (iii) i It covers both stock
i exchange and
i over the i i i i i i
and saasal Investors
selling
a i a i a i a i a i
adsaasal d a
l a
saasal counterdamarket. l
saasal a
d a
l
saasal a
d a
l
saasal a
d a
l a
a
P Pa d a
P Pa d a
P Pa d a
P Pa d between
a
P Pa d a
P Pa d a
P Pa d PaPdad
3. Bring out the scope of Financial Market in 5. Gained person Company Investors
India.
laiai aslaailaiThe financial i i
saaslaalamarket dprovides
i i
saaslaala financial
ilai Intermediary
saaslaa6.
i i
saaslaala Underwriters
i i
saaslaala Brokers
i i
saaslaala
adsaasal Ans.
d a sa(i) d a a d a d a d a d a as
PaPa d d
PaPa to individuals,
assistance PaPa d PaPa
agricultural
sectors, industrial sectors, service
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 28
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
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saaslaala
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saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
aPa d XIIPStd d
2. Enumerate the different types of Financial (v) On the Basis of the Organizational
laiai Markets. i (any 5) i [PTA-2; QY-'19; i
May-'22] i Structure ilaithe Financial iai i
saaslaaof saaslaalMarket : sasla
l a a i l a a i l a a i l a a i alai
adsaasal d a saasal d a saasal d a saasal d a saasal d a d a d a a as
Ans.
a d
P PaFinancial markets a d
P Pa can be classified a d
P Pa in different a
P Pa d a d
P PaExchange Traded
(a) a d
P Pa Market : P a
Pa d
Exchange PaPdad
ways. They are as follows : traded market is a centralized
(i) On the Basis of Type of Financiali Claim : organization (stock exchange) with
laiai i
aala
saasl(a)
i i i
saaslaala: Debtdmarket
i
saaslaala is the dadsaaslaala
i i
saaslaala
i i
saaslaala
i i i i
saaslaala
adsaasal a Debt Market
a a a a a as
d
PaPa d d d
PaPa market for
financial
d
PaPtrading
a Pa a
in DebtP
PaPastandardizedPprocedures.
d d d
aPa d PaPad d PaPdad
(b) Over–the–Counter Market : Over –
m
Instrument (i.e. Government Bonds
laiai the –lacounter marketla isiaa decentralizedlaiai
adsaasal a saaslaailai or Securities,a saaslaailcorporate
ai
a aaslaailai or asaaslaailai
Debentures
s s asaila(outside
market
a a
i
a s
theaasastockl i asaasal
exchange) as
PaPdad PaPdad
Bonds). PaPdad PaPdad PaPdad PaPdad PaPdad PaPdad
with customized procedures.
co
(b) Equity Market : Equity market is the
laiai i i financial market for tradinglainiaEquity 3. laia Discuss the role i ofi FinancialaMarket.
adsaasal a saaslaala Sharesdof a aslaailai
saCompanies. a saasal
i
a saasal
i
a saaslaala [Mar-2020; a
ilai
saslaaAug-'21; FRT-'22]
a
i i
saaslaala as
d
PaPa d PaPa d PaPa d d PaPad d PaPa d d PaPad d PaPad d PaPdad
(ii) On the Basis of Maturity of Financial Ans. One of the important requisites for the
Claim:
.
accelerated development of an economy is the
laiai aailai Money Market
ls(a) lsaailai: Money market lsaailai is the saslaaila i
existence ofsaasla
ilai
adynamic and aailai
saaaslresilient
i i
saaslaala
financial
adsaasal
ks
a saa a saa a saa a a a a a a as
a d d a d d a d d a d d market. a d d
P PAa financial market a d d
P Pa is of greatPuse a d d PaPdad
P Pa P Pafor short term
market P Pafinancial claim P Pa Pafor a
country as it helps the economy in the following
Introduction to Financial markets

(usually one year or less) Example :
manner.
laiai laala TreasurysaBills,
i i laailai Commercial laailaPaper,
i laailai laailai s:aaslaala
i i i i
saaslaala
adsaasal d a saas a
Certificates
d a s of Deposit d a saa s d a saas (i) Savings
d a saasMobilization d a d a as
PaPdad
PaPa d PaPa d PaPa
oo d PaPa d PaPa d PaPa d PaPa d
(b) Capital Market : Capital market is the Obtaining funds from the savers or surplus
market for long units such as household individuals,
laiai lsaailai more than ilai term financial
lasaayear a ilai claim a ilai iai i i i i
adsaasal d a saa
d a saa Exampled a sa
l
: sShares and da as
a a s a l a business
d a saaslaalfirms, d a saaslaalasector dunits,
public a saaslaala as
a
P Pa d a
P Pa
Debentures
d a
P Pa d a
P Pa d a
P Pa d
Government aPa d
is anPimportant role P a
Pa by
played d PaPdad
www.Padasalai.Net
ab
(iii) On the Basis of Time of Issue of Financial financial markets.

i Investment
i (ii) i :i
laiai saaslClaim:
aailai i i i i i i i i
adsaasal d a d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala as
PaPa (a) Primary
d PaPa Market : Primary
d d
PaPa market isPaaPa d Financial
PaPa d market PaPplays
a d a keyPaP role
a in
d PaPdad
term used to include all the institutions arranging the investment of funds thus
ur
that are involved in the sale of securities collected, ini those units which are in need i
laiai lsaailai lsaailai lsaailai lsaailai of the ssame. lsaalai lsaailai saaslaala
i
adsaasal d a saa for the d a saa
first time by d a saa
the issuers dada s a
d a aa
d a s aa
d a as
a
P Pa d a
P Pa d
(companies). HerePthe
a d
Pa money from a
P Pa a
P Pa
(iii) National
d
Growth
a
P :Pa d a
P Pa d PaPdad
investors goes directly to the issuers.
.s
Financial markets contribute to a nation‘s

laiai (b)
l a i a i Secondary l a ilai : Secondary
Market l a ilamarket
i l ailai growth aby i i
saslaalaensuring san
ilai
aslaaunfettered flow i i
saaslaala
adsaasal d a a
sasa l
d a a
sasa d a a
sasa d a a
sasa d a d a a d a as
PaPa d is the d
PaPamarket for P d
securities
aPa that are
PaPa d of d
PaPsurplus
a funds d
PaPtoa deficit units. d
PaPaFlow PaPdad
already issued. Stock Exchange is an of funds for productive purposes is also
w
important institution in the secondary made possible. It leads to overall economic i i

laiai lsaailai market. saslaailai lsaailai lsaailai growth. lsaailai lsaailai saaslaala
adsaasal d a saa
d a a d a saa
d a saa
d a saa
d a s aa
d a as
a d
P Pa(iv) On thePBasis a d
Pa of Timing a
P Pof a d
Delivery PofP
a a d a
P Pa d
(iv) Entrepreneurship a a d
P PGrowth : a
P Pa d PaPdad
w
Financial Claim Financial markets contribute to the

laiai i i i i development iai of the entrepreneurial
ai i classlailai
saasl(a)
aala Cash/Spot Market : Cash
i i i i
adsaasal d a d a saasla ala d a saaslaaor la Sport asaslaala
d a by d a saaslaalavailable
making dthe
a slala
saanecessary d a saasa
financial as
PaPa d market d
PaPais a market where d
PaPa the deliveryPofaPa d PaPa d PaPa d PaPa d PaPdad
w
the financial instrument and payment of resources.

cash occurs immediately. i.e. settlement (v) Industrial Development :
laiai l a i a i l a i a i l a i a i la i a i The different i i
saaslaala components
i i
saaslaala of financial
i i
saaslaala
adsaasal d a saasal is completed d a l
saasaimmediately. d a saasal d a saasal d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d markets
a
P Pa d help an a a d
P Paccelerated growth
P Pa of
a d PaPdad
(b) Forward or Futures Market : Forward industrial and economic development of
or futures market is a market where the a country and thus contributing to raising i i
laiai l a ilai delivery ofaasset laailai and payment laailaofi cash saslaailai the standard laailai of livingsasand laailai the society's alala
adsaasal aas as a s
daada s s
daada
a s daada s
daada
as daada daadsasa as
PaPdad P a
takesPplace at a pre-determined P aP P a
time inP P a
well-being.
P P aP P a
P PaPdad
future.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
PaPa Sura’sPaXII
d d d
Pa Std - Commerce
d d
PaPa d d
PaPa d d
PaPa d d
PaPa d d
PaPa d PaPdad
laiai i i i i
PTA Questions
i i and Answers
laiai laiai i i i i
adsaasal d a saaslaala d a saaslaala d a saaslaala asaasal asaasal a saaslaala a saaslaala as
a
P Pa d a
P Pa d a
P Pa d PaPdad PaPdad a d
P Pa d a d d
P P2aM arks PaPdad
I. V ery S hort A nswer Q uestions .
laiai 1. Write a note on Financial Market. ilai [PTA-1; QY-'19]

adsaasal aslaailai
saA
i
alai
saasla
i i i i
saaslaala such dasadfinancial
saaslaala claims, aslaailai
sassets saaslaaare aslaailai
sknown as
Ans.
d a market wherein
d a financial instruments
d a d a a and securities
d a tradeddis
a a
PaPa d PaPa d PaPa d PaPa PaPa d PaPa d PaPa d PaPdad
as a 'financial market'.
m
laiai II. S hort
aslaailai
A nswer Q uestions .
aslaailai i i
saaslaala saslaailai i i
saaslaala aslaailai
3 M arks i i
saaslaala
adsaasal d a s
a d a s
a d a d a a d a d a s
a d a as
a d
Pa Differentiate
P1. a d
P PaSpot MarketPfrom a d
Pa Future Market.a
P Pa d a
P Pa d a
P Pa d a d
P PaMay-'22]
[PTA-1; PaPdad
co
laiai S.No ai i i i Spot Market i i i i i iFuture Market i i i i
adsaasal a al la
sasa a saaslaala a saaslaala a saaslaala a saaslaala a saaslaala a saaslaala as
PaPa 1.
d d SpotPmarket
aPa is a market
d d PaPawhere the delivery
d d d
PaPa d Future
PaPamarket is a market
d d PaPa where thePdelivery
d d d
aPa d of PaPdad
of the financial instrument and payment of assets and payment of cash takes place at a per-
.
cash occurs immediately i.e. settlement is determined time in future.
laiai lsaailacompleted
i lsaailai lsaailai lsaailai lsaailai i i
saaslaala
i i
saaslaala
adsaasal
ks
d a s
a a
d a s
aimmediately.
a
d a s
a a
d a saa
d a s
a a
d a da as
a d
P Pa 2. a d
P Pa is also known
Spot market
a d
P Pa as cash market. a
P Pa d a
P a d a d
P Pa as Forward
FuturePmarket is also known
a d
P Pamarket. PaPdad
laiai
adsaasal
III. L
a as
i i A nswer aQ
salaala
ong i i
s laala
uestions
a as
. ala
s ala
i i
a as asaaslaailai a
i i
saaslaala a
i i
saaslaala
5 M arks
alaailai
asas as
PaPdad PaPdad PaPdad d d d PaPdad PaPdad
oo PaPa d PaPa d PaPa d
1. What are the functions of Financial Markets? [PTA-3]
Ans. Thei financial marketi two functions : i i
laiai aslaalai aslaalai saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a saI. Intermediary d a saFunctions d a d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net
ab
II. Financial Functions

laiai I. i Intermediary
i Functions
i i : Thelaintermediary
i i functions
i i of a financial i i market include i ithe following i i
adsaasal a saaslaala a saaslaala a saasala a saaslaala a saaslaala a saaslaala a saaslaala as
d
PaPa d (i) P Transfer
d
aPa d of resources
PaPa : FinancialPmarkets
d d d
aPa d facilitate
PaPthe
a transfer ofPreal
d d aPaeconomic resource
d d PaPa from
d d PaPdad
lenders to ultimate borrowers.
ur
(ii) Enhancing Income : Financial ilai marketsaallow lenders earnainterest / dividend on their surplus
laiai aslaailai investible aslaaifunds
lai andathus aslaacontributing laailai aslailaofi the individual
aslaailaiand the anational i i
saaslaala
adsaasal d a sa d a sa d sa d a sato
s the enhancement
d a sa d a sa d as
a
P Pa d aPa d
Pincome. a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
.s
(iii) Productive Usage : Financial markets allow for the productive use of the funds borrowed and
laiai l a ilai thus enhancing i i
saaslaala thedincome
i i
saaslaalaand the dgross
i
alai
saaslanational
i i
saaslaala
production.
i i
saaslaala
i i
saaslaala
adsaasal d a a
sasa d a a a d a d a d a as
PaPa d
(iv) P
aPa d
Capital Formation
d
PaPa: Financial markets d
PaPa provide aPachannel Pa d
through
d
PaPwhich
a d
PaPa flow to
new savings PaPdad
w
aid capital formation of a country.

laiai l a i a i
saasal (v) Sale Mechanismi i
saaslaala : Financial i i
saaslaalamarketdprovides
i i
saaslaala a mechanism
iai selling of aalafinancial
saaslaalfor sasala
i i assetsaby ailai
slaan
adsaasal d a d a d a a d a d a d a a as
a
P Pa d a d
Pinvestor
Pa so as toPoffer a d
Pa the benefitsPof a d
PamarketabilityP and a d
Pa liquidity ofPsuch a d
Pa assets. P Pa a d PaPdad
w
(vi) Information : The activities of the participants in the financial market result in the generation
laiai i i and theaconsequent ilai dissemination
i i of information
i i to the variousi i segments ofi the
i markets,aso iasi
adsaasal d a saaslaala to reduce d a saslaathe cost of
d a saaslaala of financial
transaction d a saaslaalaassets. dadsaaslaala d a saaslaala d a saslaala as
PaPa d PaPa d PaPa d PaPa d PaPa PaPa d PaPa d PaPdad
w
II. Financial Functions : The financial functions of a financial market include the following :
laiai (i) Providing the borrowerslwith funds so aslatoilaenable them to carry out theirlainvestment plans.
adsaasal a saaslaailai a saaslaailai a saasaailai a saasa i a saaslaailai a saasailai a
i i
saaslaala as
a d
P Pa d (ii) a
P Pa d
Providing
d the a
P Pad
lenders dwith earning
a d
assets
P Pa d so as to a
P Pad
enable
d them to a d
earn
P Pa dwealth by d
deploying
a
P Pa d the PaPdad
assets in productive ventures.
laiai l a ai (iii)
i Providingailiquidity
l a i in theamarket
l a i i so as to a
l a facilitate
i i tradingaof
l a i funds.
i l a ai i l aai i
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 30
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
aPa d XIIPStd d
laiai i i Government
lailai
Elxam
ailai
Questions
lailai
and A nswers i i
lailai i i
adsaasal d a saaslaala asaasa asaasa
lala
asaasa asaasa asaasa a saaslaala as
a
P Pa d PaPdad PaPdad PaPdad PaPdad PaPdad a
P Pad d PaPdad
I. C hoose the C orrect A nswers .
1 M ark
laiai 1. Whichsaaslaalaone is non

i i
smarketable
aslaailai assets? i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala [QY-'19] i i
saaslaala
adsaasal d a d a a d a da d a d a d a as
d
PaPa(a) Government d
PaPasecurities PaPa d d d
PaPa (b) BondsPofaPPublic
a sector P d
undertakings
aPa PaPa d PaPdad
(c) National Savings Certificates (d) Shares of listed companies
m
i i [Ans. (c)i National Savings Certificates] i i
laiai la a aslaailaisi not a correct
aslaailapair?
i aslaailai aslaalai aslaailai [Mar-2020]
saaslaala
adsaasal 2. adaWhichadsaasal of the following
d a s
a d asa d a s
a d a sa d a sa d a as
PP a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(a) Forward Market - Future Market (b) Debt Market - Government Bonds
co
(c) Money Market - Commercial Papers (d) Equity Market - Debentures
a laailai a laailai a laailai a laailai aslaailai aailai
saasl(d)
i i
saaslaala- Debentures]
i i
saaslaala
s
ada s d a sa s d a s
a s d a s
a s d a s
a [Ans.
d a Equity Market
d a d a as
aP Pa d a d
P Pa a d
P Pa a d
P Pa a d P Pa a d P Pa a d P Pa PaPdad
.
laiai I. C hoose i i
saaslaalathe C orrect
i i
saaslaalaA nswers s.aa1aiai ark 6. iIni primary markets,
saaslaala saaslaala property
i i
saaslaaof
ilaishares which i i
saaslaala
adsaasal slalM
ks
a
P Pa d a
P Pa d a
P Pa d a
P Pa d made it
a
P Paeasy
d to sell newly
a
P Pa d issued security
a
P Pa d is PaPdad
i. Choose the correct option. considered as

laiai 1. Type ilaimarket inawhichi i ilai less i(a)
i increasedalliquidity
i i i i i i
adsaasal d a saaslaaof d a saslaala securities
d asaaslaawith d a saaslaala d a sasaala d a saaslaala d asaaslaala as
PaPdad
d
PaPathan one year d
maturity
PaP a d
are traded,
oo
PaPa is classified PaPa d PaPa d
(b) decreased liquidity
PaPa d PaPa d
as (c) money flow
(a) money market (b) capital market
laiai laailai i i
saaslaala (d) global laailai i(d)
saaslaala
i i
saaslaala[Ans. (a)
i large funds i i
increased
saaslaala liquidity]
i i
saaslaala
adsaasal d(c)
a saastransaction dmarket
a d a saasmarket d a da d a d a as
a
P Pa d a
P Pa d
[Ans. (a)
a a d
P Pmoney market]
a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net
7. Money market where debit and stocks are
ab
traded and maturity period is more than a

ilai 2. Process ilaiof selling aand ilabuying
i of stocks ilai and ila i laiai laiai laiai
as sa year is classified
asasal as
l a l a l a l a la
da
a
as sa bonds
da
a
as sa is classified a asassa a
as sa
ad da
a
ad da ad da asasalad da asasal ad da as
PaPda(a) PaPdad
e-trade Pa trade P Pa
(b)Pstock P Pa
(a) shortterm marketsP Pa P Pa PaPdad
(c) both 'a' and 'b' (d) none of these
ur
(b) longterm markets

laiai sala ilai l ai ai [Ans.s(a) l ilai
aae-trade] l aailai aslaailai i i
saaslaala
i i
saaslaala
adsaasal d a a s a d a saas a l
d a aas d a saas (c) capital d a smarkets
a d a d a as
a d
3.P PaPrimary andPsecondary aPa d a
P Pa
markets
d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(d) None of these [Ans. (c) capital markets]
(a) compete with each other
.s
laiai ai i
(b)sacomplement each ilai i i 8.alaila Type of structuredi i market through
i i which i i
saaslaaother
i
adsaasal a a slala a a saaslaala a sasa a saaslaala a saaslaala a saaslaala as
d d d
PaPa(c) functionPindependently
aPa d PaPad d PaPad d fundsPflow
aPa with helpPofaPfinancial
d d da d instruments
PaPad d PaPdad
(d) control each other such as bonds and stocks is classified as
w
[Ans. (b) complement each other] (a) financial markets

laiai lsaailai lsaailai lsaailai aslaailai i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal 4. adIn a s
a a
primary markets,
d a saa first time d a aa
issued
s shares d a sa (b) flow d a
market d a d a as
d
P Pato be publicly a d
P Patraded, in Pstock a d
Pa markets PisPa a d a
P Pa d a
P Pa d a
P Pa d PaPdad
w
considered as (c) funds market

laiai laailai offeringsaslaa(b)
(a)sastraded ilai Public markets i i i(d)i capital market i i i i i i
adsaasal d a a d a a d a saaslaala d a saaslaala d a saaslaala d a saaslaala d a saaslaala as
d
PaPa(c) issuance offeringPaPa d d
PaPapublic offering
(d) initial PaPa d PaPa d PaPa
[Ans. d aPa
(a) financialPmarkets] d PaPdad
w
[Ans. (d) initial public offering]

9. The first issues are floated in
laiai 5. Treasury lsaailai Bill is basically
lsaailai lsaailai i i
saaslaala ai i
slala
i i
saaslaala
i i
saaslaala
adsaasal d a s
a a
d a saa
d a saa
d a (a) Primary
d a saamarket d a d a as
a d
P Pa(a) An instrument a d
P Pa to borrowPshort-term a
Pa d fundsa
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(b) An instrument to borrow long-term funds (b) Secondary market
(c) An
laiai laailainstrument
i of acapital
lailai market saaslaala
i i i(c)
saaslaala
i Commodity i market
saaslaala
i i i
saaslaala
i i
saaslaala
adsaasal d(d)
a s
a aNone
s of the d s
above
a aas d a d a d a
(d) Regulated marketPaPa d a d a as
d
PaPa[Ans. (a) AnPinstrument
aPa d d
PaPa short-term
to borrow
PaPa d PaPa d d PaPa d PaPdad
funds] [Ans. (a) Primary market]
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
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P Pa d a
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laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
PaPa Sura’sPaXII
d d d
Pa Std - Commerce
d d
PaPa d d
PaPa d d
PaPa d d
PaPa d d
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ii. Match List I with List II and select iii. Choose and Fill in the blanks.
laiai ai i
slalacorrect
ai i
slala
ilai codes alailai
saaslaathe laailai i i
saaslaalaor arrangement
i i
saaslaala
adsaasal d a saathe d a saaanswer using
d a d a a _______
sas1. d asaasis an institution
d a d a as
a d
P Pa given below P Pa .
a d a
P Pa d a
P Pa d a d
P Pafacilitates the
that
a d
P Paexchange of a d
P Pafinancial PaPdad
instruments.
1.
laiai laailai List I saslaailai List
laailaIIi i i
saaslaala (a) Financial
i i i i
saaslaalaMarket dadsaaslaala
i i
saaslaala
adsaasal s
aa as a a 1) Corporate s
aa as a a a as
PaPdad i) Organised
PaPdad PaPdad d
PaPa d (b)PaPda d
Capital marketPaPa d
PaPa d PaPdad
sector debentures (c) Organised sector
m
ii)laiaUnorganised 2) Equity shares of (d) Unorganised sector
laiai i aslaailai aslaailai i i
saaslaala aslaailai aslaaiFinancial
lai alaailai
adsaasal a s
a asal sector a s
a s
companies
a a a a s
a [Ans.
dadsa(a) daMarket]
dsas as
PaPdad PaPdad ad
P Pa d a d
P Pa d dd
PaPa PaPa PaPa PaPdad
iii) Debt market 3) Indigenous bankers 2. ________ is the financial market for trading in
co
iv)laiaEquity market debt instrument that is government bonds ior
laiai i laaila4)i Financial linstitutions
aailai laailai securities. laailai laailai saaslaala
i
adsaasal d as a as a l
d a saas d a saas d a saas d a saas d a saas d a as
d
PaPa Codes : PaPa d PaPa d PaPa d aa
(a)P P
d
Equity market
d
PaPa (b) Debt marketPaPa d PaPdad
(i) (ii) (iii) (iv) (c) Money market (d) Capital market
.
laiai (a) a i i 1 2 a i 3 i 4 ai i a i i i i [Ans. i Debt market]
i (b) i i
adsaasal
l
asal a l
saasal1 a l
saasal a l
saasal a saaslaala saaslaala saaslaala
ks
d a sa(b) 4 d a
3 2 d a d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a d
P Pa 3. _______ a d
P Pa is the market a d
P Pafor short term a d
P Pafinancial PaPdad
(c) 2 3 1 4
claim.
(d) i 3 4 2 1
laiai i i i i i i i (a) Debt amarket
i i (b)ala Equity
i i marketalailai
adsaasal a saaslaala [Ans.
a
aala
saasl(b) (i)-4; (ii)-3;
a
laala
saas(iii)-1; (iv)-2]a saaslaala a saslaala a sasala s sa as
d d d d (c) aMoney market
d a (d) Capital market
d adada PaPdad
a
P Pa d a
P Pa d P Paa
ood a
P Pa d P Pa d P Pa d P Pa
2. List I List II [Ans. (c) Money market]
laiai i) i Money
i market i i 1) Stock exchange
i i 4.i i __________ i market
i is the ilamarket
i for long i i
adsaasal d a saaslaala d a saaslaala d a saaslaala d a saaslaala termdfinancial
a saaslaala claim dmore
a saaslaa
than a year.
d a saaslaala as
a d
P Pa ii) Capital a d
P Pmarket
a 2) a d
P PaSale of securities a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net (a) Primary market (b) Secondary market

ab
iii) Primary market 3) Debentures (c) Equity market (d) Capital market
laiai l a ilai l a ilai l a ilai l a ilai i i
saaslaala [Ans.saasla
i
alaiCapitaldamarket]
(d) i i
saaslaala
adsaasal d a saiv)
a sa Secondary d a samarket
asa 4) dTreasury
a sasa Bills dadsasa
a a
d a d a as
d
PaPa Codes : PaPa d PaPa d PaPa 5. _________ PaPa d d
PaPa for securities
is the market
d
PaPathat are PaPdad
(i) (ii) (iii) (iv) already issued.
ur
laiai (a) i i 1 2 i 3 i 4 i i i i iai i i i i

adsaasal a
l
saasal a a
a
l
saasala a
a
l
saasala a
asaasal (a) Primary
l a a
a saaslaalmarket a saaslaala a saaslaala as
a d
P Pa d (b) 2 a d
P Pa 3
d 1 4
a
P Pad d a
P Pad d (b)P P
a d d
Secondary
a market
a
P Pad d a d
P Pa d PaPdad
(c) 3 4 1 2 (c) Debt market
.s
(d) i 4 3 2 1 (d) Equity market

laiai laalai laailai laailai laailai i i
saaslaala [Ans.
ilai
saaslaaSecondary
i i
saaslaala
adsaasal d a saa
s [Ans.
d a saas(d) (i)-4; s
(ii)-3;
d a aas
(iii)-2; (iv)-1]
da saas d a d a(b) d market]
a as
3. List I List II 6. ___________ for productive purposes is also
w
made possible.
laiai sai)
aslaailaSavings Mobilization 1) Flow
saaslaalaof fundsdadsaaslaala (a) Saving
i i i i i i i ilai i i i i
adsaasal d a d a saaslaala d a d a saaslaamobilizationd a saaslaala d a saaslaala as
a d
P Pa ii) National a d
P PaGrowth P P a d
2)a Government a
P Pa a
(b)P P
a d
Investment P P
a a d a
P Pa d PaPdad
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securities (c) Flow of funds

laiai iii)
alaalaMarketable aassets
i i i
laala i alaala funds alaala (d) Noneaof
3) Pension i i i i laailthese
ai [Ans.
alaail(c)
ai Flow of funds]
alaailai
adsaasal asas asas dadsas dadsas ss
adada
ss
adada
ss
adada as
PaPdad iv) Non-marketable
PaPdad PaP
4)a HouseholdPaPa P Pa intermediation P Pa Pa that PaPdad
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7. Financial is the P
process
assets individuals the financial intermediaries connect _______
laiai aslaailai : i i i i i i and __________
aslaailai by transferring i i funds afrom i i
adsaasal d a saCodes d a saaslaala d a saaslaala d a saaslaala one sided a sato another. d a saaslaala d a saslaala as
a
P Pa d d
(i)P Pa(ii) (iii) P(iv)
a aPa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(a) 4 1 2 3 (a) Banks and account holders
(b) i 1 2 3 4 (b) Borrowers and securitiesifirms
laiai laalai 2 laaila i laailai laailai (c) Borrowers laailaiand lenders
saaslaala
i i i
saaslaala
adsaasal d a sa(c)
a s d
3
a saas 4 1
d a saas d a saas d a saas d a d a as
d
PaPa (d) 3 PaPa4 d 1 P2aPa d PaPa d d
aInvestors
(d)P P a PaPa
and lenders
d PaPa d PaPdad
[Ans. (a) (i)-4; (ii)-1; (iii)-2; (iv)-3] [Ans. (c) Borrowers and lenders]
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 32
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
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P Pa d a
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laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
aPa d XIIPStd d
iv. Pick the odd one out. (c) (A) is true, but (R) is false.
alsaailai laailai i i
saaslaala
i i
saaslaala
i(d)
saaslaala
i (A) is false, iai (R) is true.
saaslaalbut
i i
saaslaala
i i
saaslaala
s
ada 1. adaadsaasDebt
(a) market
d a d a d a d a d a d a as
PP a
P a d a
P Pa d a
P Pa d PP
[Ans.
a d
a Both (A) and
(a)
a d
a are true and
P P(R) a d
P Pa(R) is PaPdad
(b) SecondaryPmarket
(c) Equity share the correct explanation of (A)]
laiai i i i i
laala marketsaslaala[Ans. (c) Equity
(d)sasFuture i i i a i
saaslaalashare] dads2.aaslaalAssertion (A) i
saaslaa: la
i
Financial i i
saaslaala facilitate
markets aslaailai
sathe
adsaasal d a a d a a d a d a d a d a as
d
PaPaReason : Those d
PaPashares whichPaP d
a not called PasaPa
are
d
PaPofa real economic
transfer d
PaParesource from d
PaPlenders
a PaPdad
m
preference share are known as Equity share. to ultimate borrowers.
Other three are types of financial markets.
laiai saaslaalReason (R) :aFinancial marketalplays
sasaala a key drole saain
i i i i i i iai i i i i ai i
adsaasal d a saaslaala d a saaslaala d a saaslaala d a d a saslaala d a a slala as
a
2.P Pa
d a
P Pa
(a) Capital formation
d a
P Pa d a
P Pa d arranging
a d
P Pathe investment P Pof
a d
a funds thusPcollected,a
Pa d PaPdad
co
(b) Sale mechanism in those units which are in need of the same.
laiai (c) aInformation
i i i i i i i(a)i Both (A)aand i (R)
i are true and i(R)i is the correct i i
adsaasal a saslaala a saaslaala a saaslaala a saaslaala explanation a saslaala of (A). a saaslaala a saaslaala as
PaPa(d) Money market
d d PaPad d [Ans. (d) PaPMoney
da d market]PaPad d d
PaPa d PaPad d PaPa d d PaPdad
Reason : Money market is the market for short (b) Both (A) and (R) are true and (R) is not the
.
term afinancial claim. aOther three are afunctions correct explanation of (A).
laiai aslailai markets. aslailai saaslala
i i
saaslaala
i i ilai
saaslaabut
i i
saaslaala
i i
saaslaala
adsaasal
ks
dof
a sfinancial
a d a sa d a d a (c) (A) isd atrue, (R) isdfalse.
a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d
(d) (A)
a d
P Pisafalse, but (R) PPa ad
is true.
a
P Pa d PaPdad

v. Which one of the following is not [Ans. (b) Both (A) and (R) are true and (R) is
laiai correctly ilai matched ilai? ilai ilai aslaailthe aslaailai
ai correct sexplanation i i
adsaasal d a a
sasa l a
d a a
sasa l a
d a a
sasa la
d a a
sasa l a
d a sanot d a a
of (A)]
d a saaslaala as
PaPdad
d
PaPa(a) Debt market
1. PaPa d PaPa
- Bonds
oo
d d
PaPa 3. Assertion d
PaPa(A) : Marketable d
PaPaassets are those d
PaPawhich
(b) Money market - Commercial paper can be easily transferred from one person to another
laiai l a i a i l a i a i l a i a i l a i
saasalwithout
ai much saaslaa
ilai
hindrance. i i
saaslaala
i i
saaslaala
adsaasal d(c)
a al
saasCapital market
d a saasal - Stock d a saasal
exchange
d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d Reason P P(R)
a d a d
a : Shares PofPalisted companies d
P Pa and
a PaPdad
www.Padasalai.Net
(d) Equity market - Equity shares of
ab
government securities are the examples of marketable

companies
laiai a ilai a ilai laailai iassets.
i ai i aslaailai i i
adsaasal d
a l
sa (c) Capital
adsa[Ans. d a a l a
sasmarket – Stock
d a saasexchange] d a saaslaala (a) Bothd (A)
a slala(R) are true
saaand d a saand (R) is the saaslaala
correct
d a as
PaPa PaPa d PaPa d PaPa d PaPa d PaPa d PaPa d PaPdad
2. (a) Secondary - Stock exchange explanation of (A).
ur
market (b) Both (A) and (R) are true and (R) is not the
laiai lsaailai lsaailai lsaailai lsaailai correctsexplanation
aslaailai i i
saaslaala
ofa(A). i i
saaslaala
adsaasal d(b)
a saa Marketable d a saa - Shares d a a
ofalisted
s d as aa
d a a d d a as
a d
P Pa assets P Pa a d a
P Pa
companies
d a
P Pa d (c) (A) a d a
P Pisatrue, but (R)PisPafalse. d a
P Pa d PaPdad
(c) Non-marketable - Bank deposits (d) (A) is false, but (R) is true.
.s
laiai assets
i i i i i i i [Ans.
i (a) Both ia(A)
i and (R) aare aitrue
i and (R)aislaailai
adsaasal saaslaala saaslaala saaslaala saaslaala saaslaalthe correct slala
sexplanation sas as
PP d a
a a(d) Money market
d aa
PP d a
d aa
PP d
- Governmentad d
Bonds a a
PP
ad aa
PPd ad PPaad a
d a
PP aof
daad(A)] PaPdad
[Ans. (d) Money market – Government viI. Choose the correct statement :
w
Bonds]
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
iai
s1.aaslaal(i)
ilai
saaslaafirms aailai
saasllarge ai i
slala
adsaasal a a a a Business
a needa funds a saato as
vI.
P PaConsider P
a d d a d d
Pa following
the a da d
P Pstatement .P Pa
a d d a d
P Pa d
undertake
a
P Pa
a desired
d d
project.
a
P Pad d PaPdad
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1. Assertion (A) : Government need funds to (ii) Financial market also helps investors to
laiai saaslaala facilitate saasthem
laailai to investsasurplus
ai i funds and
provide i i i i i i
saaslaalagoods and sservices
aslaala to the apeople.
i i i i
adsaasal d a d a a d saaslaala d a d a d a a slala d a saaslaala as
d
PaPReason
a (R) : P aPa d
Financial aPa d
marketPfacilitates PaPa
business d earn
PaPaa return. PaPa
d d PaPa d PaPdad
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firms as well as governments to raise the needed (iii) The Indian financial system can be
funds broadly classified into organized sector i i
laiai lsaaby
ilaiissuing an selling
lsaailai different sinstruments.
lsaailai lsaailai and unorganizedlsaailai sector. lsaailai saaslaala
adsaasal d a saa
d a saa
d a aa
d a saa
d a saa
d a saa
d a as
a Select
P Pa d the correct
a
P Pa answer.
d a
P Pa d a
P Pa d
(a) (i)
a d
Pacorrect
P is a
P Pa d a
P Pa d PaPdad
(a) Both (A) and (R) are true and (R) is the correct (b) (i) and (ii) are correct
laiai explanation
i i of (A). i i i i i (c)
i (ii) and (iii) iare
i correct alaailai i i
adsaasal a saaslaala a saaslaala a saaslaala a saaslaala a saaslaala a sas a saaslaala as
PaPa(b) Both (A)Pand
d d aPa (R) are truePand
d d aPa (R) is not the
d d PaPad d (d) (i), da and (iii) are
PaP(ii)
d Pacorrect
Pa
d d d
PaPa d PaPdad
correct explanation of (A). [Ans. (d) (i), (ii) and (iii) are correct]
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
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P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
PaPa Sura’sPaXII
d d d
Pa Std - Commerce
d d
PaPa d d
PaPa d d
PaPa d d
PaPa d d
PaPa d PaPdad
2. (i) Unorganized sector consist of Regulators, III. S hort A nswer Q uestions . 3 M arks
laiai lsaaila
Financial
i lsaailai
institutions, lsaailai Markets saslaailai
Financial lsaailai lsaailai i i
saaslaala
adsaasal d a saa
d a saa
d a saa
d a a d a saa
d a s aa
d a as
a
P Pa d and financial
P Pa services.
a d a
P Pa d a d
P Pa 1. Write d
P Paa short notePon
a a
Pa d a
P Pa d PaPdad
(ii) The organised sector consists of Money (a) Primary market (b) Secondary market
laiai i lenders,
i Indigenous i i Bankersaletc. i i Ans.
i i (a) Primary i market
i : i i i i
adsaasal a saaslaala a saaslaala a sasaala a saaslaala a saaslaala a saaslaala a saaslaala as
d
PaPa (iii) The financial
d d
PaPa system Pfacilitates
d d
aPa d the flow d
PaPof
a d PaP(i)
a Primary market
d d PaPa is a term used
d d PaPto
a include
d d PaPdad
funds from the suppliers to the users. all the institutions that are involved in
m
(a) (i)i is correct laiai (b) (ii) is the sale of securities for the first time
laiai lsaaila l aailcorrect
i l aailai ailai issuers. salaailai i i
saaslaala
adsaasal d a saa
(c) (iii) is a
correct
d saas a l
d a saas a
d a saas d a saaslathe
by
d a a s d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a a d
P P(ii) a d
Pa from investors
Here thePmoney
a d
P Pa goes PaPdad
co
(d) (i), (ii) and (iii) are correct
directly to the issuers.
laiai i i [Ans. (c) (iii) i is correct] i i i i i i i
saaslaala (b) d Secondary
saaslaala market s:aaslaala
i i i i
adsaasal d a saaslaala d a saaslaala d a saaslaala d a a d a d a saaslaala as
Pa3. d
Pa (i) Equity d
PaPmarket
a aPa d
is thePfinancial market PaPfor
a d PaP(i)d
a Secondary a d
PaPmarket is thePa d
market
Pa for PaPdad
trading in equity shares of companies. securities that are already issued.
.
(ii) Stock
laiai aslaaila
(ii) Stock
i exchange aslaailis
aian important aslaailinstitution
ai aslaailai laailai exchange aaiis
lai
an important
aslsecondary laiai
adsaasal adsaasal
ks
a sa a sa a sa a s a a s aainstitution
s in a s
thea market. as
ad d
P Pa ad d
in the secondary
P Pa ad d
market.
P Pa ad d
P Pa ad d
P Pa ad d
P Pa adP Pa PaPdad
(iii) Exchange Traded Market is a centralized 2. Explain the classification of financial assets.
laiai organisation
laaila i laail(stock
ai exchange)
laailai with lAns. aailai Financialsaassetslaailai
can be classified
laailai
differently under ilai
adsaasal d a saas standardized
d a s aa s procedures. d as aas d a s
a as different
d a circumstances.
a s d One
a sa as such d a saaslaais
classification : as
PaPdad
PaPa d PaPa d PaPa
ood PaPa d PaPa d PaPa d PaPa d
(a) (i) is correct (i) Marketable assets
(b)ai (ii) and (iii) areaicorrect (ii) Non-marketable assets i
laiai lsalai lsalai lsaailai lsaailai lsaailai sa:aslaala
i i i
saaslaala
adsaasal d a saa
(c) (ii) is a
correct
d saa
d a saa
d a s
a a (i) d a saa
Marketable Assets
d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
www.Padasalai.Net
ab
(d) (i), (ii) and (iii) are correct (a) Marketable assets are those which can
be easily transferred from one person
laiai laailai [Ans. s(d) laa(i),
ilai (ii) and (iii) laaare
ilai correct] alailai ailai
slaanother
iai
saaslaalmuch
i i
saaslaala
adsaasal II.
d a s
Vaas S dAa aa s Q d a saas . 2 M d a s
a s a d a saato without
d a hindrance.
d a as
PaPa d ery hort
PaPa d nswer d
uestions
PaPa arks
PaPa d PaP(b)
a d aPa
ExampleP: Shares
d aPa d
of ListedPcompanies, PaPdad
1. What is money market? Government securities, Bonds of Public
ur
laiai Ans. la
saMoney
i a i market l a
saaissathe
i ai
l marketasfor l a i a i
asalshort termasaasal l a i a i ai i
saasector
slala undertakings
i i
saaslaalaetc.
i i
saaslaala
adsaasal d a asal
d a d a d d a d a d a as
a d
P Pa financial claim. a d
P Pa (E.g) Treasury a d
P PaBills, Commercial a
P Pa d a d
P PaNon-marketable
(ii) a d
P PaAssets : P Pa a d PaPdad
paper, Certificates of Deposit. (a) If the assets cannot be transferred easily,
.s
laiai 2. sWhat i i
aslaala do you amean i i i i i i they i come
i underalthis i icategory. alailai
adsaasal a saaslaalby a capital market?
a saaslaala a saaslaala a saaslaala a sasaala s sa as
Pa d
Ans.d a
Pa Capital Market
d d
PaPa is the market d d
PaPa for long Pterm d
aPa d d
PaP(b) d
a ExampleP:aPBank da d deposits,PaPdaada
Provident PaPdad
financial claim more than a year. (E.g) Shares, funds, Pension funds, National savings
w
laiai Debentures.
laiai laiai laiai laiai Certificates,
laiai Insurance
laiai policies etc.laiai
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laiai i i
saaslaala
i i
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i i
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i i
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i i
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w
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
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saaslaala
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laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 34
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
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P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
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saaslSample,
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saaslaaBook
ai or
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saaslaala
i i
saaslaala
a
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laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
Chapter
5
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
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saaslaala
CAPITAL MARKET
a d
P Pa d a d
P Pa d a d
P Pa d a d
P Pa d a d
P Pa d a d
P Pa d a d
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a d a d a da d a d a d a as
m
laiai i i
saaslaala
i i
saaslaala
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saaslaala
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saaslaala
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saaslaala
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saaslaala
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saaslaala
a
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P Pa d a
P Pa d a
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co
laiai i i
saaslaala laailai
saasCHAPTER
i i
saaslaala
SNAPSHOT
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
5.1 Meaning and Definition
.
5.2i Characteristics of Capital Market
laiai i i
saaslaala lsaalai lsaailai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal
ks
a a saa5.3 Kindsa saa
of Capital Marketa a a a as
a d
P Pa d a d
P Pa d ad
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P Pad d a d
P Pa d a d
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5.4 Functions and Importance of Capital Market
5.5 Indian Capital Market – Evolution and
laiai i i
saaslaala
i i
saaslaala Growth
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PaPdad
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oo
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a
d a d
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a
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a
d as
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ab
I. C hoose the C orrect A nswers . 5. The _______ was set up by a premier financial
iinstitution
sato
aslaaallow
ilai the trading
laiai saaslaala of securities
i i i i i i i i i i i
adsaasal a saaslaala a saaslaala a saaslaala a saaslaala a a a saaslaala as
d d
1.PaPaCapital market
d d
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a PaPa
FRT-'22]
d d acrossPathe
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country.
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ur
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i OTCEI (b) Factoring
laiai laailai aslaailai aslaailai aslaaila aslaailai i i
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i i
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adsaasal d a sa s d a sa d a sa d a sa (c) Mutuald a s
Funds
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d
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a a
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(d) Long term Funds (d) Venture Funds Institutions
.s
[Ans. [Ans. (a) OTCEI]

laiai laailai laaila(a)
i Short term laailaFunds]
i laailai laailai laailai i i
saaslaala
adsaasal 2.PaPdaWhen
s as
ada the NSEI d a
was
saasestablished d a saas d a saas
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d a saa s . d a as
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uestions
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1. What is Capital Market? [PTA-2; FRT&July-'22]

(a) 1990 (b) 1992 Ans. Capital market
laiai
adsaasal (c) s laailai
as1998 s aslaailai (d) 1997 s aslaailai s aslaaila i
s aslaailis
ai a marketsawhere
slaailai buyers sand aslaailai as
d a a d a a d a a d a a sellers engage
d a a in trade dof
a afinancial securities
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(b) 1992]
d a
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P Pa d a
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like bonds and stocks. The buying and selling is
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3. Primary market is a Market where securities undertaken by participants such as individuals

laiai are ilai in the alailai[PTA-2; FRTal&ailJuly-'22]
traded
l a a i l a ila i
sasa and institutions.
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal d a a
sasa d a sasa d a sasa d a a
d a d a d a as
d
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a d (b)PaPa d
Second d
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(c) Three Time (d) Several Times Ans. (i) OTCEI means Over The Counter Exchange
of India. ai i
laiai
adsaasal
alailai
a sa s a a saaslaailai [Ans. (a)
a sa
First
aslaailaTime]
i
a saaslaail(ii)
ai
The saaslala was set
OTCEI
a a saa
up
ai i
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4.P PaParticipantsPinPthe a capital market P Pa includes P Pa P Pa
financial P Pato allow the
institution
a
P Ptrading
[PTA-3; FRT-'22] of securities across the electronic counters
laiai (a) Individuals
i
laala i i i (b) Corporate i i i i throughout i the
i country.alaailai i i
adsaasal a
(c) saasFinancial a saaslaala (d) All
Institutions aof
a
slalaabove dadsaaslala
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[Ans. (d) All of the above] investors and medium-size companies.
laiai i i
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i i
saaslaala 35 i i
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saaslaala
i i
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3. Who are the participants in a Capital Market? (c) This accelerates the capital formation
ala
saain athe
laiai ilai a i i a i i [FRT-'22] a i i i i country. alailai i i
adsaasal a sasa a
l
saasal a
a
l
saasal a
a
l
saasal a
a slala a sasa a saaslaala as
Ans.
a
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include
a
P Pa d (ii) a
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d d and Continuous
a
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individuals, corporate sectors, Government, (a) The stock exchange provides a central
banks and other financial institutions.
convenient place where buyers and sellers

laiai laailai laailai laailai laailai laailaeasily
i laailand
ai sell securities.
saaslaala
i i
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How is price d s as
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a Easy marketability PaPa d d
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Ans. The price of the securities is determined based
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on the demand and supply prevailing in the in securities more liquid as compared
laiai to other assets. laiai
adsaasal a sa aslaailai marketafor
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Explain a sa aslaailai Factoring
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Capital
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laiai 1. What ilai are the various ilaikinds of Capital ilai Market? alailai ai i
(a) sa"Factoring" is an ai i i i
adsaasal d a asal a
saExplain. (any d a3)a
sasa l a
d a a l a
sasa [QY-'19] d a sasa d a a slala d a saaarrangement
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whereby
a saaslaala as
PaPa d PaPa d PaPa d PaPa d d
PaPa a financialPinstitution aPa d provides d
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Ans. Capital market is divided into two i.e. primary accommodation on the basis of
market and secondary market.
.
assignment/sale of account receivables.
laiai lsaailaPrimary
(i) i lsaailai :
Market lsaailai lsaailai l a ilai l a ilai laailai
adsaasal
ks
a sa a a saa a saa a saa (b)
a sa aThe
s factoringdinstitutions
a a saas a collect a saasbook
the as
a d d (a) P a d
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P Pa Pa market isPaP market
a for newP issues
Pa P Pa debts forPand Paon behalf ofPits Paclients.
or new financial claims. Hence, it is also (c) Some of the factoring institutions
called Newi Issue Market. i operating in Indialaare i i SBI Factors and
laiai i i
saaslaala(b) Thedaprimary
i
saaslaala market
i
saaslaalawith those saaslaala
i i ai i
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a subsidiary of State Bank of India and
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for the first time.
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laiai i (c)
i In the lprimary i i market, i borrowers
i i i ailai i i i i
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exchange
d a
a
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a
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www.Padasalai.Net
ab
(d) There are three ways by which a company (a) Venture capital financing is a form of
equity financing designed especially for
laiai laailai may raise laacapital
ilai in a primarylaailai market. saslaailai laailai new andsinnovative laailai ai i
slala
adsaasal d a sa as Theyd a s as
are,
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a Venture P aPa
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d
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(i) Public Issue
the hi-technology projects which are
ur
(ii) Right Issue

laiai i i converted into commercial production.
adsaasal a saaslaala (iii)dadsPrivate aslaailai Placement a saaslaala
i i
a saaslaala
i i
a
ai i
slala includedaRisk
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ilai
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i i
as
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(a) Secondary Market may be defined as the of IFCI, Venture Fund of IDBI,
.s
SIDBI, Technology Development and

laiai ilai market afor iold i
securities, in the ilaisense that alailai ai i aslaailai ai i
adsaasal d a a
sasa l a securities
d a
l a l a
sasawhich aredapreviously a
sasa l a issued
d a sasa d a saInfrastructure
aslala d a saCorporation d
ofsaIndia
a a slala as
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a primary market d
PaPa are tradedPhere. aPa d d
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(b) The trading takes place between investors
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IV. L ong A nswer Q uestions .

who follow the original aissue in the ai i
laiai l a i a i l a i a i l i a i
saas1.
l ala Discuss sathe
ilai
aslaacharacters ilai
saasalaaCapital
of saaslaala
Market. i i
adsaasal d a saasal primary
d a al
saasmarket. d a saasal d a d a d a d a as
a
P Pa d
(c) P
a
It P
d
a both stock
covers
a a d
P Pexchange aPa
andPover-
d P Pa
a d a d
P P[PTA-3;
a Mar-2020; a d
P PaFRT-'22] PaPdad
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the counter market. Ans. The characters of a capital market are as follows :
(i) Securities Market : The dealings in a capital
laiai aslaailai any two
2. asaExplain laailai
functions of CapitallaailaiMarket. saslaailai ilai
laaare laailathe
i ilai
saaslaalike
adsaasal d d a saas d a saas d a a market
d a sa as done dthrough
a saas securities
d a as
Pa d
Pa The functions
Ans.
d
PaPaof capital market d
PaPa are as follows: PaPa d d
PaPshares,
a d
PaPa etc. The capital
debentures,
d
PaPa market PaPdad
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(i) Savings and Capital Formation : is thus called securities market.

(ii) Price : a The
ilaiprice of theasecurities
laiai (a) In
aslaailai securities
capital ilai
aslaahelp
market, various ilai
aslaasavings
types of
aslaailai aslon laailai is determinedsaaslaala
i i
adsaasal d a sa d a sa to mobilize
d a sa from
d a sa based
d a sa a the demandd a sa sand supply prevailing
d a as
a
P Pa d a d
Pa sectors of P
Pvarious aPa d
population
a
P Pa
(Individuals,
d a d
P Pina the capital P a d
Pa for securities.
market
a
P Pa d PaPdad
Corporate, Government, etc.). (iii) Participants : There are many players in the
laiai i (b) The twin features
i of reasonable i return i capitallamarket.
ilai The participantsi i of the capital
adsaasal a
i
saaslaala anddadliquidity
i
saaslaala in stock a
laala
saasexchange
i
a saaslaala
i
a saasainclude
market saaslaalacorporate
individuals,
a a aslaailai
ssectors, as
PaPad d PaPa PaPad d are
PaPad d d d
PaPGovernment,
a d
aPa
Pbanks d d d a
PaPafinancial PaPdad
definite incentives to the people to invest and other
in securities. institutions.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 36
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
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ai or
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saaslaala
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saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
aPa d XIIPStd d
(iv) Location : Capital market is not confined to (b) Many specialised financial institutions
laiai saaslcertain
aailai specificsalocations,
laailai although
saaslaalita is true dadsaaslaala have promoted theiraown
saslaalaventuredcapital
i i i i ilai i i i i
adsaasal a a a smarket a a saaslaa a a saaslaala as
a d
P Pa d that partsaof
P Pad the
d area
P Paconcentrated
d d in
a
P Pa a
P Padfunds.
d a
P Pad d a
P Pa d PaPdad
certain well-known centers knows as stock (c) They include Risk Capital Foundation
exchanges. It has its impact in the overall of IFCI, Venture capitali of IDBI, SIDBI, i
laiai aailai
saseconomy,
l wherever i i
saaslaala suppliers aslaailusers
sand ai of saslaailai laailaand
i others. alaalai
saaslaala
i
adsaasal d a a
d a d a a aa TDICI
a saas a sas a as
d
PaPa capital get d
PaPtogether
a and P d
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a PaPdad (ii)
d d
PaPa Funds : PaPa
Mutual
d d PaPa d d PaPdad
(v) Market for financial assets : Capital market
m
provides a transaction platform for long term (a) Financial institutions that provide facilities
laiai aiai
lsfinancial assets. laiai laiai laiai for aailai
saachanneling
slavenues
savings i i
saaslaaoflasmall investors
i i
saaslaala
adsaasal d a a al
s a
dasaasal asaasal
d asaasal
d d a
into of d a
productive a
investments
d as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
2. Briefly explain the functions of capital market. are called "Mutual Funds".
co
(any 5) (b) Specialized
laiai laailai marketsfunctions laailai are assfollows laailai : laailai ilai financial a
laaetc.,
institutions like LIC, i
laailai banks such i
adsaasal Ans. The
d a saacapital
s d a aa s d a aas d a saas dUTI,
a saas beside dcommercial
a sa s d a saaslaala as
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d
aPaCapital Formation d
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PaPaas SBI, and P d
aPa Bank arePcarrying
Canara aPa d PaPdad
market, various types of securities help to out the business of mutual funds.
.
mobilise savings from various sectors of i Factoring
i(iii) Institutions : i i
laiai aailai
saaslpopulation
iai
saaslaalindividuals, aailai
saaslcorporate, saaslaala saaslaala
i i
saaslaala
i i
saaslaala
adsaasal
ks
a alike a a a a a as
a d d
P Pa government, a d d
P Pa etc. a d
P Pa d a d
P Pa d (a)
a
P Pad"Factoring"
d is an
a
P Pad arrangement
d a
P Pa d
whereby
d PaPdad
a financial institution provides financial
(ii) Permanent Capital : The existence of a capital accommodation on the basis of assignment/
laiai market/stock
a ilai exchange
a ilai enablesacompanies a ilai a ilai aailaaccount
i i i i i
adsaasal d a a
sastol a
raise a
permanent
d
a l
sasa capital. dadsasa l
d a a
sasa l
d
sale
a saaslof d a saaslaala
receivables.
d a saaslaala as
PaPdad
PaPa d PaPa d PaPa
oo PaPa d d
PaPaSome of the
(b)
d
PaPafactoring institutionsPaPa d
(iii) Industrial Growth : The stock exchange is
operating in India are SBI Factors and
a central market through which resources
laiai aailatransferred ilai industrial sector Commercial ServiceslaPrivate Limited,laiai
adsaasal aslare i atoslaathe aslaailai of the asaaslaailai a aslaailai of State
subsidiary asBanka
ilai
of India saasal
aPdaadand
s s s s s as
Capital Market
a a a a a a a a a a
PaPdad economy. dad existencePofadcapital
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of Canara Bank.
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d d
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d d d
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the guiding factors for the people to channelize (a) NSEI was established in i1992 to function i i
laiai aailai funds insaaparticular
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laiai i i
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funding new and innovative project ideas.

laiai i i
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d a d a d a d a as
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1. Oil and Coffee are sold in a commodity
laiai aslaailai Mention saaslaala (i) Guaranteed

ilai market to ilai i i i i aailai i i
adsaasal d asamarket. d a saaslaathe d a saaslaawhich they
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1. Explain (iv) Predominated by such institutions as LIC,
laiai ailai about aVenture a ilai Fund institutions.
a ilai a ilai laailaand
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a l
d a sasa l
d a a l
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thedcommercial
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PaPa Venture Fund
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.
financing designed negotiation of each transaction.
laiai lsaailaandi l aailai especiallysfor l aafunding
ilai new
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saaslaala
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promoted their own venture capital funds. capital, securities are first offered to the existing
laiai (iii)
l a ilaThey
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I. C hoose the C orrect A nswers . 1 M ark (c) It expands our exports

(d) It brings in new technical know-how ai i
laiai aslaailai the acorrect
i.daCsahoose laailai option .laailai laailai laailai laailai l a
adsaasal dadas as s
daada
as s
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(d) Money market [Ans. (a) Primary market]

laiai ala ilai [Ans. ila(d)
i Existing shareholders]
ilai 5.ilai The existence i i i i i i
adsaasal d a sasa d a a
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laiai aslaala i aslaalai aslaailai aslaailai (c) industrial i capital alaailai
aslaailagrowth i i
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d a sa d a sa d a sa d a sa d a sas d a saaslaala as
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a d
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capital
laiai (c) i Toi provide employment
laailai opportunities
laailai for l6. Which markets make possible to generate
aailai foreign scapital?
adsaasal a sa aslaala
various s
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the people in (a)P P market

productive channels (b) Secondary market
laiai (c) Moneylamarket
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[Ans. s aslaailemployment
ai s slaailai
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saasamarket saasla
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a
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P Pa d a
P Pa d a
P Pa d a
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3. Which of the following is the advantage of 7. NSEI was established in
investment of foreign capital in India?
laiai aslaaila i ilai i i i i (a) 1990 alaila(b) i 1992 alaailai aslaailai
adsaasal d a sa(a)
d a saaslaaindustrial
It brings larger
d a saaslaala
profits
d a saaslaala (c) 1996d a sasa (d) 1998 d a sas [Ans. (b)
d a sa1992] as
d
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saaslaala
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P Pa d a
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laiai laiai laiai
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8. The NSDL was set up in the year Codes :
laiai lsaailai (b) 1992
(a)sa1990 l a i a i l ai ai l a
saasala
i i (i) sa(ii) ai i (iii) sa(iv)
slala
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slala
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saaslaala
adsaasal d a a d a saasal d a saasal
[Ans. (c) 1996] d a d a a d a a d a as
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d 1996 (d)
a
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9. In capital markets, major suppliers of trading (b) 4 3 1 2
instruments are (c) 2 3 4 1 i i
laiai laailai aailai
lcorporations laailai laailai laailai laala i i
saaslaala
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m
laiai (d) manufacturing
ilai corporations
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a saaslaala
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10. Which of the following instruments are traded country's financial system.
in capital market? (a)
i Capital market (b) Financial market
laiai laailai laailai laailai laaila laailai aailai market salaailai
lDebt
adsaasal (a)s
ada aGovernment
s
aPdaada
a
agency
s s securities s
aPdaada
a s s a
aPdaada
s (c) Money s
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a
market
s (d)
s a
aPdaad(a)
a s
aPdaada
s as
PaPda(b) P
Negotiable bank CDs P P P [Ans.
P Capital P market] PaPdad
(c) Repurchase agreements 2. Capital market offers an ideal source of
.
laiai (d) aCommercial
laailai papers _______ finance.
adsaasal aslaailai aslaailai aslaaila i i i
saaslaala aailai
saaslexternal
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ks
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Government
d a a
agency
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d a d a(b) d a as
a
P Pa d a
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P Pa d a
P Pa d a
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(c) both
d a d
P Pa(d) none ofPthese aPa d PaPdad
11. Which of the following does financial services
industry consist of? [Ans. (b) external]
laiai i i i i i i 3. i Capital
i market iis i called _________
aailai market.salaailai
adsaasal d
I)
a saaslaaTele d a saaslaala
la communication
d
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a
laala
saasInsurance d a saaslaala (a) financial
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[Ans. (c) securities]
(c) I, IIi and III (d) II, III andi IV
laiai l a a i l a i a i l a a i 4. l a i Capital
a i market
l a i a i provides alaaailai transaction alailai
adsaasal a l
dadsasa
a l
dadsasa [Ans. (d)dII, saland IV] dadsaasalplatformdafor
adsaaIII a al
dsas________ term dadsasfinancial dadsasa as
Capital Market
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(a) long (b) short

ii. Match List I with List II and select
(c) medium (d) none of these
i i the lacorrect
ilai answer ilai using the ilacodes
i ila i ilai iai (a) long] i i
a l
adsasa
a l a
d a a a l
sasa below.dadsasa a
d a a l
sasa a
d a a l
sasaa
d a a l
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laiai asaailai saasala2) lsaailMarket
ai lsaaila i lsaailai lsaaila[Ans.
i i i
saaslaala
(a)atwo]
adsaasal dii)
a sa Securities d a Resale
d a saa
market d a s
a a
d a saa
d a saa
d as
a
P Pa d a
P Pa d a
P Pa d a d
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market
Pa for newPissues a d
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iii) Primary market 3) Debentures new financial claims.
.s
iv) lSecondary (a)

i Secondary (b) Primary
laiai aailai laaila4)i Long term laailfunds
ai laaila laailai aailai
saaslDebt
i i
saaslaala
adsaasal d a saasmarket d a saas d a saas d a s
a as (c) Money
d a saas d (d)
a d a as
PaPa d PaPa d PaPa d PaPa d
PaPa d d
PaPa [Ans. (b) P aPa d
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Codes :
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(i) (ii) (iii) (iv) toi a small group of investors.laiai
laiai (a) aslaaila
1i 2 asaasla
i
3lai 4 asaasla
ilai aslaaila aslaailai i i
saaslaala
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a (a) Public
d a s
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a d (b)
a al
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(c) 2 3 1 4 [Ans. (c) Private Placement]

(d) i3 i 4 2i i 1
saaslaala(iv)-2] dad8.saaslaal___________ saaslaacommodities saaareai raw
laiai i i i i i i i materials i i
adsaasal d a saaslaala [Ans. d a(b)
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(a) Hard (b) Soft

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laiai i) lHard a i i a i 1)
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saasal a
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l
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a d a
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floorless (a) Hard commodities (b) Soft commodities i
laiai iii) l ailai
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and i laail(c)
ai Capitalsmarkets laailai laailai saaslaala
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d
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PaPa marketsPaPa d PaPa d PaPdad
iv) NSEI 4) Rubber and iron [Ans. (b) Soft commodities]
laiai i i
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saaslaala
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saaslaala
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saaslaala
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P Pa d a
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laiai laiai laiai
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laiai connection
aslaailai withaala_______
i i of new, i long-term
i i i i i laailaForeign
i i i
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d a
l a
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a
d a saaslaala
capital as
a d
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laiai (c) Privileged subscription facilities for channeling savings i of

i small investors
adsaasal a aslaaila
sa(d)
i
all of the above
a
i i
saaslaala [Ans. a(a)
aailai
saaslPublic issue]
a
i i
saaslaala a
i i
saaslaala of productive
a saaslaala investments
a
ilai
saaslaaare as
a d
P Pa d a d
P Pad a d d P Pa a d d P Pa into
PaPadavenues
d d
PaPa d d
PaPa d PaPdad
11. Financial intermediaries ____________. called 'Mutual funds'. Other three are functions
m
(a) i do not invest in inew long-term securities of capital market.
laiai aslaala
(b) i
include i
saaslaala companies
insurance saaslaaand
ilai pension alailai ai i
slala of the
ai i
slala
aailai
saaslnot
adsaasal d a sa d a d a d a a
sasv. W hich
d a saaone d a saafollowing d a
is as
a
P Pa d fundsP Pa
a d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(c) include the national and regional stock correctly matched?
co
exchanges 1. (a) Venture iFund Institutionsi –i SIDBI
laiai (d) l ailaare laailai
i usually underwriting laailai
syndicates laailai laalai saaslaala– LIC dadsaaslaala
i i
adsaasal a saa s a a saas a saas a saas (b) Mutual
a saas Funds a as
PaPa [Ans. P
d d (b) d
aPainclude insurance
d PaPa companiesPaand
d d d
Pa d PaPa d d PaPa d d PaPa PaPdad
pension funds] (c) Factoring Institutions – Canara bank
12. Capital market provide funds for projects in
.
(d) NSEI – 2000
laiai ____________
lsaailai areas
lsaaila.i lsaailai lsaailai i i i i aslaailai
adsaasal saaslaala saaslaala(d) NSEI
[Ans. –s2000]
ks
a s a a s a a s a a s a a a a as
a d d a(a)
P Pa (c) urban backward
a
P Pad d a (b)
a d rural
d a a d d a
P Pa 2. (a)P P a d d
OTCET – Over a d
P PThe d
a Counter PExchange a d d a
of PaPdad
Panone of these
P(d) a Pa
[Ans. (a) backward] India
laiai 13. Stock i i exchange ________
i i speculationi i in lailai (b) NSEI laila –iNational Securities i i Exchange iofi
adsaasal a aslaala
sashares. a saaslaala a saaslaala a saasa a saasa India dadsaaslaala a saaslaala as
d d d d d d PaPdad
d
PaPa (a) does P aPa
not
d
allow
aPa
P(b)
oo
d
discourage P P
aa d Pa a
(c) P
d
SHCIL –
Pa a
StockPHolding Corporation
PaPa d
of
(c) encourage (d) prohibits India Limited
ai i [Ans. (c)aencourage]
laiai aslala market ilai
asislaaconcerned ilai
saasla_______
i i
saaslaala (d) NSDL
i –iNational Securities
saaslaala
i i Depositories
saaslaala
i i
saaslaala
adsaasal 14.
d a saPrimary d a sa d awith d. a d a d a d a as
a d
P Pa (a) Increase a
P Pa d a
P Pa d a
P Pa d a
P Pa d Limited a
P Pa d a
P Pa d PaPdad
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in shares
ab
(b) Decrease in shares [Ans. (b) NSEI–National Securities Exchange

(c) i of Newashares
Issue of India]
laiai laaila laailai laailai laailai laailai laailai i i
saaslaala
adsaasal d a saa
(d)
s None of these
d a sa s d a saas d a saas d a saas d a saas d a as
d
PaPa d
PaPa [Ans. (c)PIssue d
aPa of New shares] d
PaPa vi. CP aPa d
onsider PaPa
the following d PaPa .
statement d PaPdad
15. Secondary market deals with _______ traded 1. Assertion (A) : The term capital market refers
ur
inlaprimary market.
laiai asaila aslaailai (b) aSales saaslaala to thedafacilities
saaslaala and institutional
saaslaala arrangements
i ilai i i i i i i i i
adsaasal a sa(a) Purchase of
a sasecurities saaslaaof securitiesa a a saaslaala as
a d d
P Pa (c) ResaleP of a d d
Pasecurities P(d) a d d
PaNone of these a d
P Pa d through
a
P Pa d which long-term
a
P Pa d d funds, botha
P Pa ddebt
d and PaPdad
equity are raised and invested.
[Ans. (c) Resale of securities]
.s
Reason (R) : The capital market consists of

laiai 16.asaSecond
i i
aslaala hand asecurities laailai are traded laainila_______
i . laailai development i i
saaslaalabanks, commercial
i i
saaslaala banksdand ai i
slala
adsaasal d d saas d a saas d a saas d a d a a saastock as
d
PaPa (a) Primary PaPa d
market PaPa d PaPa d PaPa d
exchanges. PaPa d PaPa d PaPdad
(b) Secondary market
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Select the correct answer.

(c) Commodity market
laiai (a) Both (A) and (R) are truelaand (R) is the correct
adsaasal s aslaaila
(d) i
Regulated aslaailai
market
s s aslaailai s aslaailai s aslaailai s asailai i i
saaslaala as
d a a d a a d a a d a a explanation
d a a of (A).
d a a d a
a
P Pa d a
P Pa d [Ans. (b)aSecondary
P Pa d market]
a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
(b) Both (A) and (R) are true and (R) is not the
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17. Inclusion of securities in the official list of

stock exchange is called _______ . correct explanation of (A).
laiai (a) l a ila i
Listing l a ilai (b) Unlisting l a ilai l a ilai (c) (A) isatrue, i i
saslaala but (R)dais aslaailai
safalse.
i i
saaslaala
adsaasal d a a
sasa d a a
sasa d a a
sasa d a a
sasa d a d a as
d
PaPa (c) Ordered PaPa d P(d) d
aPaNone of these PaPa d (d)PaP
(A) d
a is false, butP(R) d
aPa is true. PaPa d PaPdad
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[Ans. (a) Listing] [Ans. (b) Both (A) and (R) are true and (R) is
laiai iv. Paick
saaslala
i i the odd one
saaslala ai i out. ai i
saaslala saaslala ai i
saaslala anot
saaslala
i i the correct aexplanation
saaslala
i i of (A)]
ai i
a
P1. d
Pa (a) Primary a d
P Pmarket
a a
P(b) d a
PaSecurities market
P Pa d 2. Assertion
P Pa (A) : Venture
a d a d a
P Pa d
P Pa capital financing is a PaPdad
(c) Price (d) Location form of equity financing designed especially for
[Ans. (a) Primary market] funding newiand innovative project ideas. i
laiai aslaailai : Primary
saReason
ilai
saaslaamarket aslaailaiof capitalasaaslaailai
is aaskinds laailai
laalai : Many saspecialised saaslaala
i
adsaasal d a d a d a Reason a (R)
s
a as a a s financial
a as
PaPa market. Other
d PaPa three are characteristics
d PaPa d PaPdad
of capital PaPad d
institutions
d
PaPa d
have promoted their P
d d
aPa venture
own PaPdad
market.
capital funds.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala 40
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
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PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
aPa d XIIPStd d
(a) Both (A) and (R) are true and (R) is the correct (a) (i) is correct
laiai explanation
i of (A). i i i ilai correct alailai i i
saasaisl not the dadsaasal(b) (i) and s(ii)
aslaaare
a i a i a i a i
adsaasal d a
(b)
l a
al (A) and
saasBoth d a(R)
l
saasaare la
true andd a(R)
l a l a
d a a d a sasa d a saaslaala as
a d
P Pa correct explanation a
P Pa d P a
of (A). P
a d a
P Pa (c) (ii)a
P Paand d (iii) are correct
a
P Pa d a
P Pa d PaPdad
(d) (i), (ii) and (iii) are correct
(c) (A) is true, but (R) is false.
(d) a(A) [Ans. i (c) (ii) and (iii)i are correct] i i
laiai laailaisi false, butsa(R) laailisai true. laailai laail(i) Government
ai laailahas laailaforeign la a
adsaasal s s s s as 3.
s as s as liberalised
s as adsaasal
dDirect as
PaPda[Ans.
ada (a) Both a(A)
ada and (R) are aPdatrue
ada and (R) isadaada daada daada
PaPdthe P
correct explanation of (A)]P P P a
Investment
P (FDI) in
P aP the country. P P a a PaPdad
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(ii) Commercial banks also investors to withdraw
3. Assertion (A) : The factoring institutions collect their deposits, and whenla they are in needlailai
laiai the laailaidebts for sand
abook aslaaonilai behalf of its ilai
aslaaclients. aslaailai of funds. aslaailai asailai
adsaasal a sa s a a a sa a sa a sa a sa asaasa as
PaPdaReason
d (R) PaP:daOTCEI
d PaPdadsome specific
addresses PaPdad PaPdad PaPdad PaPdad PaPdad
problems of both investors and medium-size (iii) The period between 1947 and 1973 marked
co
companies. the development of infrastructure for capital
laiai laailai(A) and (R)
(a)sasBoth are a ilatrue
i and (R) is the
a ilacorrect
i a ilai market.alailai i i i i
adsaasal d a a d a a
sasa l
d a a
sasa l
d a a
sasa l
a sasa a saaslaala a saaslaala as
PaPa explanation
d PaPaof (A).
d PaPa d PaPa d (a) (i)PaisPacorrect PaPa
d d d d PaPad d PaPdad
(b) Both (A) and (R) are true and (R) is not the (b) (i) and (ii) are correct
correct explanation of (A).
.
(c) (ii) and (iii)iare correct
laiai lsaailaisi true, buts(R)
(c)sa(A) lsaailisaifalse. lsaailai lsaaila i lai are correct
aslaa(iii) i i
saaslaala
i i
saaslaala
adsaasal
ks
a a a aa a saa a saa (d) (i), (ii) a sand
a a a as
a d
P Pa (d)
d (A) is false,
a
P Pa but
d d (R) is true. a
P Pa d d a
P Pad d a d d
P Pa[Ans. (d) (i),P(ii) a d d a
Paand (iii) arePcorrect]
d
Pa d PaPdad
[Ans. (b) Both (A) and (R) are true and (R) is
not the correct explanation of (A)] 4. (i) The factoring institutions collect the book
laiai 4. Assertion i
saaslaala (A) :dadPrimary
i i i
saaslaala marketdaisdsaaasmarket laailai few saslaailai debts for and on behalf oflaits
aslaailai asailai
clients. laailai
adsaasal d a
new issues orPnew aPa financial claims. d a a (ii) OTCEI d a saaddresses some
d a sspecific
a problems
d a saaof
s as
PaPdad
PaPa d
oo
PaPa PaPa d PaPa
both
d PaPa
investors and medium-size
d PaPa d
companies.
Reason (R) : Hence, it is also called new Issue
Market. (iii) NSEI was established in 1992 to function
laiai (a) aBoth ilai(A) and (R)aare ilatrue and (R) is the i correct i iai exchange. i i i i
saasala as admodel saaslaalstock
a a i a i a i
adsaasal
l a
sasexplanation sa
s(A).l l
saasal a l saaslaala saaslaala as
Capital Market
d a d a
of a d a d a a d a d a
a
P Pa d a
P Pa d a
P Pa d a
P Pa d (a) (i) is
a
P Pa correct
d a
P Pa d a
P Pa d PaPdad
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(b) Both (A) and (R) are true and (R) is not the
ab
(b) (ii) is correct

correct explanation of (A).
(c) (i) and (iii) are ilai correct alailai
laiai (c) a(A)laailaisi true, buts(R) laailisaifalse. laailai laaila i laa(iii) i i
adsaasal d a
(d)sa s(A) is false, a
but
d aas
(R) is true. d a saas d a saas (d) (i), (ii)
d a saa
and
s are correct
d a sasa d a saaslaala as
PaPa[Ans. (d) (i),P(ii) aPa d aPa
and (iii) arePcorrect]
d PaPdad
[Ans. (a) Both (A) and (R) are true and (R) is
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the correct explanation of (A)] II. V ery S hort A nswer Q uestions . 2 M arks
laiai aslaailai i i
saaslaalastatement
i i
saa.slaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
adsaasal vii. dCashoose
a the a
correct
d d a d a1. What is a
securities
d Market?
d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
1. (i) The buying and selling is undertaken Ans. The dealings in a capital markets are done
.s
byi participants such through the securities like shares, debentures,

laiai a i a ilai as individuals a ilai and aila i ilai laailai as securities i i
adsaasal d a a l a l a
sasinstitutions. d a a
sasal
d a a
sasal
d a sasa etc. The capital
a l
d a saaslaamarket is thus
d a saascalled d a saaslaala as
PaPa d
(ii) The participantsPaPa d d
PaPcapital
of the
a PaPa
market
d market.
PaPa d PaPa d PaPa d PaPdad
2. Define capital market.
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include individuals, corporate sectors and

Ans.i According to Arun i K. Datta, capital market i i
laiai laailai financialsainstitutions.
asother laailai aslaailai aslaala i aslaailaas aslaailaofi institutions
saaslaala
adsaasal d a sa d a a s d a sa d a sa may be defined
d a sa "a complex
d a sa d a as
a
P Pa d
(iii) Capital Pmarket aPa d provides a d
P Paa transaction a
P Pa d a d
P Pa and practices
investment
a d
P Pawith established a d
P Palinks PaPdad
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platform for term financial assets. between the demand for and supply of different
laiai (a) (i) i
laalais icorrect i i i i i types
i of capital gains".
ilai i i i i
adsaasal d a
(b)saas(ii) is correct
d a saaslaala d a saaslaala d a saaslaala
3. What is d a saaslaaissue?
public d a saaslaala d a saaslaala as
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(c) (i) and (ii) are correct Ans. The most common method of raising capital by
(d) (i), (ii) and (iii) are correct new companies is through sale of securities to
laiai l a i a i l a i a i l a i a i la i the
a i public. It is
la i
called
a i public issue.
l a i a i i i
saaslaala
adsaasal d a saasal [Ans.
d a al (i) and d
saas(c) (ii)
a asalcorrect] asaasal
saare d 4. What is a saasal
SEBI?
d d a saasal d a as
a a d
2.P P(i) Secondary
a a d
P Pmarket, a d
P Paexchange new
borrowers
a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
Ans. SEBI means securities and Exchange Board of
financial securities for long-term funds.
India. SEBI emerged as an effective regulatory
laiai (ii) aSecondary
laailai market laacovers
ilai both stock laaexchange
ilai laaila i i aslaailai i i
adsaasal d a sa sand over the
d a s as
counter
a market.
d a saas d a saas body
d saasla
for athe alai
primary and
d a sasecondary d a saaslaala
markets as
PaPa a measure
and afford d
PaPofa protectionPto d
aPasmall PaPdad
(iii) Capital market has a crucial significance
investors.
to capital formation.
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
d a d a d a d a as
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai Kindly
laiai Share Your
laiai to OurlaEmail
laiai laiai laiai
laiai i i ilai
saaslaais
This aailai
saaslSample,
Onlydfor
ilai
saaslaaBook
ai or
i i
saaslaala
i i
saaslaala
a
P Pa d a
P Pa d a d
PaAll Leading a
P Pa d a
P Pa d a
P Pa d a
P Pa d PaPdad
laiai i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
i i
saaslaala
PaPa Sura’sPaXII
d d d
Pa Std - Commerce
d d
PaPa d d
PaPa d d
PaPa d d
PaPa d d
PaPa d PaPdad
5. What do you mean by derivatives market? financial transactions increasingly outstrip
laiai Ans.s(i) l ai a i
Derivatives market
l a i a i facilitates l ai
thea i trading l a i
saasal physical
a i ai i
saapurchases
slala
which aailaito be delivered.
saaslare
i i
saaslaala
adsaasal d a aasal
d a saasal d a saasal d a d a d a d a as
a
P Pa d in financial d
P Pa instruments
a d
P Pa such as futures
a a
P Pa d Commodities
a
P Pa d are commonly
a
P Pa d classified
a
P Pa din two PaPdad
contracts and options used to help control subgroups.
financial risk. i (i) Hard commodities : Hard commodities

laiai laailaThe
i laalaiderive their laa ilai laailai laaila i laailai mined, such iai
saaslaalas
adsaasal d a sa(ii)
as instruments
d a saas d a saas value mostlyd a saas are
d a s raw
aas materials d typically
a saa s d a as
PaPa d
fromPthe
d
aPa value of anPunderlying aPa d aPa
assetP that
d d
PaPgold,
a oil, rubber, PaPirond
a and ore.PaPa d PaPdad
m
can come in many forms - stocks, bonds, (ii) Soft commodities : Soft commodities
are typically
laiai
adsaasal s aslaailai commodities,
s
currencies
aslaailai or
s
mortgages.
aslaailai s aslaailai s aslaailai grown s asagricultural
laailai primary
saaslaa
ilai
as
6.d a aWhat is Mutual
d a aFund? d a a d a a products
d a a such asdwheat,
a a cotton, coffee
d a and
a
P Pa d a
P Pa d a
P Pa d a
P Pa d a a d
P Psugar. a
P Pa d a
P Pa d PaPdad
Ans. (i) Financial institutions that provide facilities
co
for channeling savings of small investors 4. Write a note on National Clearance and Depository
laiai l a ilainto
i avenuesalof i i
sasaalaproductive aslaailai
sinvestments are
i i
saaslaala System aslaailai
s(NCDS). saaslaala
i i i i
saaslaala
adsaasal d a a
sasa d a d a a d a d a a d a d a as
PaPa d called d
Pa'Mutual
Pa Funds'.PaPa d d
PaPa Ans. Under d
PaPa the scriplesss d
PaPtrading
a system, d
PaPsettlement
a PaPdad
(ii) A mutual fund company invests the funds of transactions relating to securities takes place
.
pooled from lshareholders and gives through a book entry. The entire scripless trading
laiai aslaailathei asaaof ilai ai them saslaailai system comprises
aslaailinvestment i i
saaslaala the dfollowing
i i
saaslaala three segments.
i i
saaslaala
adsaasal
ks
d a sa benefit
d a sa d s
diversified
a a d a a d a a d a as
a
P Pa d a d
P Paand a reasonable
portfolio
a d
P Pa return. P Pa a d a a d
(i)P PNational Trade PPa a d
Comparison a a d
P PReporting
and PaPdad
System, which prescribes the terms and
III. S hort A nswer Qi uestions . i3 M arks conditions i iof contract for the securities market.
laiai saaslaala
i i
saaslaala
i
saaslaala
i i i
saaslaala (ii) National saaslaala Clearing aslaailai iai
saaslaalat
adsaasal d a d a d a d a d a d a sSystem
a which d aaims as
PaPdad
Pa
1. d
Pa How newPaP d
issues
a are floated
oo d
PaPa in the primary PaPa d PaPa d PaPa d
determining the net cash and stock liability
PaPa d
market?
of each broker on a settlement date.
laiai Ans. There i are three ways i by which a company i may laiai i i
adsaasal a
l
saraisea a i
asal capital inaasaaprimary l
sal
a a i
market.
a
l a
saasThey a i
al are : dasaasal (iii) National a saaslaalaDepository a aslaailai which aarranges
saSystem,
i i
saaslaala as
d d d d d d d d d
P Ptoa provide forPthe d d d d PaPdad
a
P Pa a
P a
(i) PublicPissue : The most
a
P Pa a
P Pa a aPatransfer of ownership a
P Pa of
www.Padasalai.Net
common method
ab
securities in exchange on payment by book

of raising capital by new companies is entry on ielectronic ledgers iwithout any physical
laiai l a ilathrough
i sale laailsecurities
of ai tosathelaailpublic.
ai It is sala ilai i
saaslaala of transfer aalai
saasldeed.
i i
saaslaala
adsaasal d a saas a d a saas d a a s d a a s a movement
d a d a d a as
PaPa d called Papublic
Pa issue. PaPa
d d d
PaPa 5. Discuss d
PaPa about evolution d
PaPa and growth PaPof d
a Indian PaPdad
(ii) Rights issue : When an existing company Capital Market.
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wants to raise additional capital, securities Ans. (i) The period

laiai
adsaasal s aslaailaarei
first aslaailto
offered
s ai the existings
ilai
aslaashareholders s aslaailai s aslaailai between s
1947
aslaailaandi 1973 marked
saaslaailai as
d a a d a a d a a d a a the
d a development
a of
d ainfrastructure
a for
d a capital
a
P Pa d aPa d
on aPpre-emptive a d
P PaIt is called P
basis. aPa
rights
d a
P Pa d a
P a d a
P Pa d PaPdad
market. DuringPthis period, a network of
issue. development financial institutions such as
.s
laiai (iii)i Private placement ilai : Privateaplacement i i is a lailai laailai IDBI and laailai SFCs andsSIDCs
adsaasal a
i
saaslaalaway of selling a saaslaasecurities a saslaalato a small a saasa IFCI,
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laiai Ans. lsaailai
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and semi-Government securities. An important The public sector bonds were introduced.
feature of the securities traded in athis market. ai i A number i i of stock aexchanges came linto
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3. What is commodity market? and explain its (iii) SEBI emerged as an effective regulatory
types. bodyafor
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in primary products which takes place in investors. New financial services such as credit
about so major commodity markets where rating was introduced.
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16
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16.3 Meaning and Definition of Consumerism
16.4 Importance of Consumerism
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Protection
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16.7 Need for Consumer Protection

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1. The term ‘consumerism’ came into iexistence (a) 1962 (b)

ilai 1972
laiai laailai aslaailai aslaalai aslaailai(c) 1930asaaslaa(d) i i
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(a) 1960 (b) 1957 with effect from [PTA-1]

laiai l a ilai l a ilai l a ilai l a ilai
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(c) P15.4.1987
2. Who is the father of Consumer Movement? [Ans. (c) 15.4.1987]
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(b) Mr. Jhon F. Kennedy [PTA-2]
laiai (c) ilai Nader alailai
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Ans. A consumer is one who consumes goods (iv) Prevention of Food Adulteration Act,
UNIT VI  Chapter-16
manufactured and sold by others or created by 1954 ai i

laiai laailai (air, water ilai
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Ans. (i) i Mixing of stones in front of their shops, even though there
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.
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ilai to buy athose
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i i i i i i i i i i aailai
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l a l a
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3. What is Caveat Emptor? [PTA-2; SRT-'22] (iii) Even in Cinema houses, board may hang
laiai Ans. 'Caveat
aslaailai emptor' is a Latin
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ilai term which ilameans
saaslaathe
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buyers that they have no recourse with the seller
laiai aailaiproduct does ilai meet theiraexpectations.
i i 3.i i Write theaimportance i i of consumerism.
i i (any i3)i
adsaasal a saif
aslthe a saaslaanot a saslaala a saaslaala a saslaala a saaslaala a saaslaala as
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Ans. The importance of consumerism lies in

Ans. Caveat venditor means "let the seller beware," by
which (i) Awakening and unitingi consumers.
laiai laailai goods aresacovered laailai by an implied laailaiwarranty saslaailai laailai laalai saaslaala
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the buyer, nearly all consumer products are (iv) Awakening the government.
laiai lsaailai
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laiai laaila1986.
i laailai laailai laailai laailai saaslaala (any 5) saaslaala
i i
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consumers
a are a
exploited? a as
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comprehensive law called the Consumer [Govt. MQP-'19; PTA-4; SRT & July-'22]
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Protection Act in 1986. Ans. Consumers are exploited in many ways. Some of
laiai lsaailai This Act scame
(ii) lsaailainto
i force with lsaaileffect
ai from saslaailai them aresagiven ai i
slala below:dadsaaslala
ai i saaslaala
i i
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d a aa
d a saa
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15.04.1987.
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in 1993. by the seller for a product/ service may

(iii) The Act is referred in short asa‘COPRA’ . not be icommensurate withi the quality but
laiai laailai laailai lailai laailai laalaiit is more sthan laailathe laailai
adsaasal aas a
(iv)
s The act s
ada a
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against goods, services, (ii) mixing or

unfair trade practices and other forms of substituting undesirable material in food.
This la causes heavy loss toi the consumers.
laiai
adsaasal a saasal their exploitation.
l a i a i
a saaslaailai a saaslaailai a saaslaailai a s asailai
Adulteration
a is a s
quite
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a
ain
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stones
1. What are the important legislationsi related to with grains, coffee powder is adultered
laiai laailai laailai (any 3). i
saaslaala[PTA-5,d6]adsaaslaala
i i with ilai
tamarind
saaslaa seed, laailai
saasetc. saaslaala
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a s ain
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Ans. PaP da d
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Act, 1872
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products of popular products are
(i) The sale of goods Act, 1930 illegally produced and sold. Duplicates
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laiai laiai laiai
laiai i i ilai
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12th
aSTD
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INSTANT
d a s
a aslaailai
SUPPLEMENTARY
d s aslaailai
Commerce
a a d a s
(with
a
EXAM
ilai
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JULY
d asa
- 2022
aslaailai
d a
i i
saaslaala
Reg. No.
d a
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saaslaala as
a
P Pa d a
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Time Allowed : 3.00 Hours] PART - III [Maximum Marks : 90
laiai i i
saaslaala: 1) Check
ilai
saaslaathe
i i
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saasislaaany
i i
saaslaala informdthe ai i
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d a d a question
d apaper d a aasprinting.
sof If there
d a lack of
d fairness,
a a saaHall as
PaPa d d
PaPSupervisor
a PaPa d
Immediately. PaPa d PaPa d PaPa d PaPa d PaPdad
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2) Use Blue or Black ink to write and underline and pencil to draw diagrams
laiai i i
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saaslPART
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saaslaala ai i
slala Which dof
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slalafollowing sisaaslaa
ilai ai i
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d a saainto as
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Note
a d
a the questions.
P Pall a d a
P Pa [20 × 1 =P20]
Pa d a d
P Pa function?P Pa
managerial a d a
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(ii) Choose the most appropriate answer from (a) Planning (b) Marketing
(c) Organizing (d)
laiai
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1. Management is an _________ summed up by John F. Kennedy
(a) Right to safety
.
(a) Art (b) Science i
laiai l aailai l aailai l aalai l aailai(b) Right stoalchoose
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saaslaala
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2.P Which of the PP following is verification function?P Pa to consumeP Pa
(c) PRight P Pa
(a) Planning (b) Organising (d) Right to be informed
laiai i i i i i i 12. i ______ haslailto
i asa ai includeasathe aslaailamechanism
i fori i
adsaasal d a saaslaaStaffing
(c) la
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laiai Kindly
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laiai laiai laiai

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laiai i i (vii) Choosing

Reviewed by : It is in our sincerest effort we take the pride

byi reputed Professors ilai who are currently serving as Head

e-mail : orders @surabooks.com textual questions. i

the subject effectively with this guide and prove their

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God Bless all.

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laiai lailai lailai lailai lailai i i

laiai 11. laEmployee Selection Process .............................................................. 86 - 98 lailai

laiai unit iai

laiai 21.lailaiThe Sale Of

28. Company Secretary ....................................................................... 241 - 250

1.6 Principles of Modern Management

as:  [Sep-2020; FRT-’22 ; May-'22]i i

(a) Manager (b) Subordinate  [Ans. (c) Division of work]

2. Management is an ________ (a) More (b) Less

laiai l ailai l a ilai l a ilai l a ilai i i

(i)ai iScience, NotaRule

laiai (iv) Co-operation, Not individualism

4. What determines the span of management?  [FRT-'22]

2. Determine the shape or configuration of the Organization

This principle states that each sub-

laiai laailai laailai laailai land i i

1. Is management an Art or Science? lailai or mechanic ilai or a musician aailaibeing ablesatolaailai

Ans. Is Management a Science :

Ans. Principles of scientific management propounded

Government Exam Questions and Answers

these words? [Mar-2020] (b) Harmony, not Discord

 [Ans. (a) scientific management] (d) By experience of producers

(a) changing technology

laiai lsaailai Fayol saslaailai (d) Taylor

for dealing with it is part of the process of (a) Functional foremanship

 [Ans. (d) Planning] (d) Harmony, not dischord

13. Management should (c) 3 laila4i 2 1lailai

(a) Management is universal  [Ans. (c) (i)-4; (ii)-3; (iii)-1; (iv)-2]

laiai [Ans.i i (d) Management i i is always bureaucratic]

iv) Cyclicali process 4) Lower level

the correct answer using the codes

laiai saaslaala management

laiai laiai i i aailai Ans. i Planning

the established goal.

3. _________ is included in every managerial motivation. Motivation includesi increasing the i i

(a) Co-ordinating (b) Controlling

Ans. The Functions of management can be classified into

(a) Staffing function comprises the

personnel. persons in the right jobs.

and adequate remuneration of personnel. notice–boards,

function. (i) Innovation :

the changes business

www.Padasalai.Net suppliers, government officials, banks,

synchronization of actual performance with financial institutions, trade unions, etc.

Government Elaxam Questions and Ai nswers

laiai aslaailai aslaailai asailai aslaailai saaslaala

right job is called placement. (i) Planninga: i i

laiai a ilaini different acapacities;

(c) Planning (d) Controlling

 i i [Ans. (c) innovation] (d) Giving assignments

as: [Sep-2020; FRT-’22 ; May-'22]i i

(a) Manager (b) Subordinate [Ans. (c) Division of work]

2. Management is an ________ (a) More (b) Less

4. What determines the span of management? [FRT-'22]

1. Is management an Art or Science? lailai or mechanic ilai or a musician aailaibeing ablesatolaailai

these words? [Mar-2020] (b) Harmony, not Discord

[Ans. (a) scientific management] (d) By experience of producers

[Ans. (d) Planning] (d) Harmony, not dischord

(a) Management is universal [Ans. (c) (i)-4; (ii)-3; (iii)-1; (iv)-2]

laiai [Ans.i i (d) Management i i is always bureaucratic]

i i [Ans. (c) innovation] (d) Giving assignments

(a) MBO (b) MBE [PTA-5]

(c) Uncertain (d) After one month

[PTA-2; QY-'19; FRT-'22] funds to provide

(iii) On the Basis of Time of Issue of Financial financial markets.

laiai 1. Write a note on Financial Market. ilai [PTA-1; QY-'19]

[Ans. (b) complement each other] (a) financial markets

[Ans. (d) initial public offering]

[Ans. [Ans. (a) OTCEI]

1. What is Capital Market? [PTA-2; FRT&July-'22]

I. C hoose the C orrect A nswers . 1 M ark (c) It expands our exports

(d) Money market [Ans. (a) Primary market]

(c) 2 3 1 4 [Ans. (c) Private Placement]

(b) Decrease in shares [Ans. (b) NSEI–National Securities Exchange