Skip to content

CS Executive · Capital Market and Securities Laws · Basics of Capital Market

During a sharp one-day fall, the Nifty 50 index moves beyond a prescribed percentage limit and trading across the market is halted for a fixed time. This mechanism is best described as:

This is the index-based market-wide circuit breaker. When a benchmark index like Nifty 50 moves beyond preset percentage limits, trading across the market halts for a prescribed period to calm panic. A single-stock price band affects only one security, not the whole market.

  1. AIndex-based market-wide circuit breakerCorrect
  2. BPrice band applicable to a single stock
  3. CCall auction session
  4. DMargin call on brokers

Explanation

A market-wide circuit breaker is triggered by movement in a benchmark index beyond set thresholds and halts trading in all equity and derivatives segments. A price band restricts movement in only one security. A call auction is a trading method, and a margin call is a demand for funds.

Did you get it right without looking?

One question tells you little. A timed set on Basics of Capital Market shows your real accuracy, how long you take and where you lose marks.

Practise Basics of Capital MarketFree diagnostic mock

More Basics of Capital Market questions