Marketing Class 12 Questions and Answers - Free PDF Download
FAQs on NCERT Solutions For Class 12 Business Studies Chapter 10 Marketing - 2025-26
1. How do you define a financial market in your NCERT solutions for Class 12 Business Studies?
A financial market is a marketplace for the creation and exchange of financial assets. As per the NCERT solutions, it performs a crucial economic function by channelling savings from households to business firms, facilitating the allocation of funds to their most productive use. It connects savers and investors by mobilising funds between them.
2. What is the correct way to differentiate between the money market and the capital market as per the NCERT textbook?
To differentiate between the money market and capital market in your NCERT solution, use these key points:
- Term: The money market deals with short-term securities (maturity up to 1 year), while the capital market handles medium and long-term funds.
- Instruments: Money market instruments include Treasury Bills, Commercial Paper, and Certificates of Deposit. Capital market instruments are Shares, Debentures, and Bonds.
- Participants: The money market is dominated by the RBI, commercial banks, and large corporations. The capital market involves financial institutions, foreign investors, and the general public.
- Risk: Money market instruments are generally less risky due to their short duration and financially sound issuers.
3. What are the key functions of a stock exchange that should be included in an NCERT-based answer for the 2025-26 board exam?
For a complete NCERT-based answer, the key functions of a stock exchange are:
- Providing Liquidity and Marketability: It offers a ready platform for buying and selling existing securities.
- Pricing of Securities: It helps determine prices through the constant interaction of demand and supply.
- Safety of Transaction: The membership is well-regulated through the legal framework of SEBI, ensuring investor protection.
- Contribution to Economic Growth: It channels savings into productive investments, fostering capital formation.
- Spreading of Equity Cult: It educates the public about investing and provides a platform to participate.
4. How would you explain the role and objectives of SEBI step-by-step for a Class 12 NCERT exercise?
To explain the role of SEBI (Securities and Exchange Board of India) step-by-step as per the 2025-26 syllabus, you should structure the answer by its functions:
- Regulatory Functions: These involve regulating the business of stock exchanges, registering and regulating intermediaries like brokers, and prohibiting fraudulent and unfair trade practices.
- Developmental Functions: These include training intermediaries and promoting investor education to develop the securities market.
- Protective Functions: These focus on protecting investor interests by prohibiting insider trading and promoting fair practices.
The primary objective of SEBI is to protect investors, promote market development, and regulate market activities.
5. Beyond just listing its functions, how does a financial market actually contribute to a nation's economic development?
Financial markets are more than just platforms for trade; they are engines of economic development. According to Chapter 10 concepts, they contribute by:
- Mobilising Savings: They channel idle funds from savers to investors who need them for productive activities. This crucial process converts savings into investment and capital formation.
- Facilitating Price Discovery: By allowing free interaction between buyers and sellers, they help establish fair prices for financial assets, which guides the efficient allocation of resources in the economy.
- Reducing the Cost of Transactions: They provide valuable information, saving the time, effort, and money that both buyers and sellers of assets would otherwise have to spend.
6. If a company wants to issue new shares for the first time, which market would it approach and why? Explain the process as per NCERT guidelines.
A company issuing new shares for the first time would approach the Primary Market. The reason is that the primary market, also known as the New Issue Market, deals exclusively with the issuance of new securities. The correct NCERT method to explain the process is through various methods of floatation, such as:
- Offer through Prospectus: Inviting the public to subscribe to its securities.
- Offer for Sale: Securities are offered for sale through intermediaries like issuing houses or stock brokers.
- Private Placement: Allocating securities to institutional investors and some selected individuals.
- Rights Issue: Offering new shares to existing shareholders in proportion to their current holdings.
7. How can a student solve a question about the instruments of the money market using the NCERT methodology?
To solve questions on money market instruments, you should identify and explain the key features of each as per the NCERT textbook:
- Treasury Bill (T-Bill): These are short-term instruments issued by the RBI on behalf of the Government of India. They are highly liquid, issued at a discount, and redeemed at par. They are also known as Zero Coupon Bonds.
- Commercial Paper (CP): This is a short-term, unsecured promissory note issued by large, creditworthy companies to raise short-term funds, usually to meet floatation costs or working capital needs.
- Certificate of Deposit (CD): These are unsecured, negotiable instruments in bearer form, issued by commercial banks and development financial institutions to individuals and corporations.
8. What is the fundamental difference between the primary market and the secondary market? Why is one essential for the other to function effectively?
The fundamental difference is that the primary market is where new securities are first issued by companies to raise capital. In contrast, the secondary market (or stock market) is where existing, previously-issued securities are traded among investors. The secondary market is essential for the primary market because it provides liquidity and marketability to these securities. Investors are more willing to buy new securities in the primary market knowing they can easily sell them later in a well-regulated secondary market. Without a thriving secondary market, demand for new issues would be very low.
9. What are the steps involved in the screen-based trading system of a stock exchange as explained in the NCERT book?
As per the NCERT book, the steps in a screen-based trading system (online trading) are:
- An investor must open a 'Demat' account with a depository participant (DP) and a trading account with a registered stock broker.
- The investor places an order with the broker to buy or sell shares, specifying the quantity and price.
- The broker enters the order into the stock exchange's computer system.
- The system automatically matches the buy order with a suitable sell order at the best available price.
- The transaction is executed and communicated to the broker's terminal, who then informs the investor.
- The shares are transferred to the investor's Demat account in a process called settlement, which now happens on a T+1 basis.
10. Why is the dematerialisation of securities considered a major reform in the Indian stock market? How would you explain its benefits in an answer?
Dematerialisation ('Demat') is a major reform because it is the process of converting physical share certificates into an electronic, paperless format. In an NCERT-based answer, you should explain its benefits as follows:
- It eliminates risks associated with physical certificates, such as theft, forgery, loss, and damage.
- It significantly reduces the paperwork involved in the transfer and holding of securities.
- It allows for the instant transfer of shares, making settlements faster and more efficient.
- It has made trading more convenient and accessible for investors across the country, removing issues like 'bad delivery'.

















