NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market
Mr. Arvind Rao, a DP client, asks why the Indian capital market is said to perform a price discovery function. Which statement best describes it?
Price discovery means that the prices of securities are determined by the interaction of buyers and sellers through demand and supply in the market. Regulators, depositories or issuers do not dictate trading prices once securities are listed.
- AInteraction of buyers and sellers determines the prices of securitiesCorrect
- BSEBI fixes the price of every listed security daily
- CThe depository sets the price at which shares are traded
- DIssuers decide the market price after listing
Explanation
Price discovery arises from the interaction of demand and supply of buyers and sellers on the exchange. SEBI, depositories and issuers do not fix trading prices of listed securities; depositories only hold and transfer securities in electronic form.
Did you get it right without looking?
One question tells you little. A timed set on Introduction to the Indian Capital Market shows your real accuracy, how long you take and where you lose marks.
More Introduction to the Indian Capital Market questions
- A client of a DP asks which of the following instruments is traded in the money market rather than in the capital market.
- Neha Kulkarni has bought shares in a rights issue made to existing shareholders only. In which category does such an issue fall?
- Ravi Menon wants to know the main difference between the primary market and the secondary market in the Indian capital market. Which stateme…
- Meera holds shares in demat form with a DP of NSDL. She sells them on the exchange but the settlement is on a T+1 rolling basis. Which state…
- A DP client, Meera Iyer, asks why the stock exchange is described as providing 'price discovery' in the secondary market. What does this mea…
- Which of the following correctly identifies the regulatory structure governing depositories in India?