Class 12th Business Studies Worksheet - W10a

Free Business Studies - Class 12th (CBSE) - Worksheet - W10a - Financial Market

Do you want free Business Studies (CBSE) for class 12th to score higher in your board exams?

Well, you have visited the correct platform.

On this page, you can find several case studies (short and long) for practice and solve them. The first section is for short case studies, followed by long case studies. 

Here are the quick details:

• Subject: Business Studies
• Class: 12th (CBSE)
• Chapter Name: Financial Market

Below is the content pattern:

• Short Case Studies
• Long Case Studies

CBSE Business Studies Case Studies (Financial Market)

Short Case Studies

Case Study 1

Identify the type of financial market in the following cases:

1. In this financial market, there is a higher degree of liquidity of the financial instruments available to the investors, as there is an institution that takes a guarantee of this action.
2. The name of this institute is DFHI (Discount Finance of India).
3. The securities return in this market is riskier in relation to other markets because there is a possibility of both recession and prosperity of the issuing company. When these companies perform well, there is a chance that the returns may go up, and eventually, when the companies do not perform well, the returns may go down and result in a loss of money to the investors.

Case Study 2

‘Hitesh Ltd.’ is a well-known company in the cement industry since 1999. The company has an authorised capital of ₹ 100 crore and is listed on a reputed stock exchange.

The value of its shares is increasing day by day due to an increase in the demand for cement.

Now the company wants to enter the car manufacturing business. For this, it requires ₹ 200 crore.

The finance manager of the company decides to raise this capital through a public issue.

1. Identify the market in which the company’s existing securities are being traded.
2. Name the market through which the company wants to raise its capital of ₹ 200 crore for its new business.
3. Distinguish between the markets identified in (i) and (ii) above on the basis of any two points.

Case Study 3

These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed the most.

To give strength to the economy, SEBI is undertaking measures to promote the stock market.

In addition to this, there is another market in which unsecured and short-term debt instruments are actively traded.

This market helps to meet the short-term requirements of the government, banks, and investors in directing the available funds into their most productive investments.

1. Name the function being performed by the market in the above case.
2. Name the market segment other than the capital market in which unsecured and short-term debt instruments are traded. Also, give any three points of difference between the markets.

Case Study 4

In 2nd five Five-Year Plan, ‘industrialisation’ was the ‘main focus’.

But the major problem was saving and investment—households used to invest in gold and property only.

The government had to take the initiative to establish infrastructure and other basic industries.
With the pace of economic development, small savings were promoted by establishing an organised market.

This market is regulated by SEBI and has contributed a lot to economic development.

1. Identify the market referred to in the case.
2. State two functions of this market.

Case Study 5

Raman, who is a broker in a stock exchange, has to face challenging questions from society.

His own family sometimes asks him to think about his decision to become a broker.

He, however, has full faith in the stock exchange.

He knows that membership of a stock exchange is properly regulated, and abiding by the legal system and the public interest is safe in making deals.

His children once asked him the reason behind the ups and downs in the stock market.

He clarified their doubt by telling them that the forces of supply and demand decide the prices of securities in the secondary market.

Of late, he has decided to write a book on the functioning of the stock exchange and its significance in the Indian economy.

He is trying to highlight in his book how, through the process of investment and disinvestment, existing securities are sold and resold, and savings are channelised into the most productive opportunities.

Definitely, Raman is justifying his presence in his job.

1. What is the meaning of the stock exchange?
2. Identify and briefly explain the functions of the stock exchange discussed in the above case.

Case Study 6

Rajiv, a small investor from a remote town, is looking to invest in stocks for the first time.

He accesses the stock market through an online platform that allows him to view real-time prices, make quick trades, and track his portfolio from his home.

The platform he uses is highly efficient, with minimal errors and quick order executions.

Rajiv is amazed by how he can trade alongside investors from different parts of the world, all on the same platform, without physically visiting any stock exchange office.

Based on the case above, list any three advantages of the screen-based trading system.

Case Study 7

Supriya’s grandmother, who was unwell, called her and gave her a gift packet.

Supriya opened the packet and saw many crumpled share certificates inside.

Her grandmother told her that they had been left behind by her grandfather.

As no trading is now done in physical form, Supriya wants to know the process by adopting which she is in a position to deal with these certificates.

1. Identify and state the process.
2. Also give two reasons to Supriya why dealing with shares in physical form has been stopped.

Case Study 8

Mr. Patel, a director of ABC Ltd., was privy to confidential information that the company was planning to issue bonus shares in its upcoming board meeting.

Anticipating that this announcement would lead to a rise in the company’s stock price, Mr. Patel took advantage of this insider information.

He decided to buy 12,000 shares of ABC Ltd. from the stock market before the announcement was made public.

Once the announcement was made, as expected, the stock price surged by 10 due to increased demand from investors excited by the bonus share issue.

After a few months, when the stock price had risen considerably, Mr. Patel sold all 12,000 shares and made a substantial profit, leveraging his access to confidential company information that was not available to general investors.

1. Name the act of Mr. Patel.
2. Is it permitted?

Case Study 9

Due to various malpractices and exploitation of investors in the securities market, the Indian Government established a separate regulatory body to protect the investors and to develop and regulate the securities market.

1. Identify the regulatory body set up by the government.
2. Discuss its various objectives.

Case Study 10

Identify and explain the type of function of SEBI in the following cases.

1. Rajeev was unwilling to buy shares in the stock market as he was told by someone that the stock market is a place where various malpractices take place. He decided to discuss the matter with his friend, who explained how SEBI takes care of the interests of the investors.
2. Prakash wants to become a stockbroker. When he approaches people and asks them to get started as investors through him, they ask for a certificate, which the SEBI must have given him. He becomes aware that in order to function as a stockbroker, he will have to get registered with SEBI.

Long Case Studies

Case Study 11

Shreya is a student of 10+2 (Commerce). Her two friends, Sugandha and Sakshi, are 10+2 (Non-medical) students. Shreya has full knowledge of the capital market. Both her friends are interested in it, but they do not have even an iota of knowledge about it. Shreya gives them the knowledge about the capital market in the following manner.

“In order to meet its financial requirements, the company issues shares. Shares are issued in the capital market. The company issues a prospectus and invites the general public to invest in shares. It is called an Initial Public Offering (IPO). The company is successful in talking when the investors are trapped.

If they so desire, they can sell their shares at the current market price to other investors so that they can use their own capital.

Another important fact is that the market in which the company issues shares has no particular place.

However, the market wherein the shareholders sell shares does have a particular place, called the stock exchange.”

1. In the above paragraph, two types of capital markets have been mentioned. Identify them.
2. Of the identified type of capital market, give two characteristics of each, by way of quotation.

Case Study 12

Reena got ₹ 10,00,000 after selling her parental property, which she had got as a gift from her grandmother. Her friend advised her to invest in securities in the stock market.

Reena was unaware of the procedure for the same. Her friend introduced her to a stockbroker, who was registered with the National Stock Exchange. Reena approached the broker.

The broker guided her to open a DEMAT account with a depository, as well as a bank account. Reena opened a bank account and a DEMAT account with Exim Bank.

1. Identify and state the steps in the trading procedure for buying and selling securities, which have been discussed above.
2. State the next four steps of the trading procedure.

Case Study 13

Rahul, an avid investor, was following the stock market closely. One day, he read about a company that suddenly halted trading of its shares due to an order from SEBI (Securities and Exchange Board of India). The company was found guilty of manipulating stock prices, which created artificial demand for its shares.

SEBI’s intervention not only suspended trading but also imposed penalties on the company’s officials involved in these malpractices.

Rahul was curious about how SEBI ensures such activities don’t go unchecked and how it helps in maintaining transparency in the securities market.

This incident made him wonder about the actual role of SEBI and how it contributes to the overall development of the securities market.

He began researching SEBI’s functions and its impact on both investors and companies.

1. Explain the purpose and role of SEBI in the Indian securities market.
2. State the developmental and protective functions of SEBI and how they contribute to the growth of the securities market.
3. State any one objective of SEBI.

Case Study 14

Rajiv Malhotra was the managing director of ‘Finvest Securities’, a leading financial services firm. The firm primarily dealt with portfolio management, mutual funds, and stock market investments. Rajiv ensured that all regulatory guidelines were followed diligently.

His firm was known for registering brokers and intermediaries according to the rules set by SEBI. Rajiv also paid close attention to the company’s responsibilities, ensuring that Finvest Securities was fully compliant with all the necessary regulations and levies.

However, during a stock market boom, there was an increase in fraudulent practices, insider trading, and speculative activities in the industry. Despite these developments, Finvest Securities continued to follow their strict regulatory framework and refused to participate in unfair trade practices. Their conservative approach limited their short-term profits but earned them a solid reputation for ethical behaviour.

In contrast, Market Flow Investments, a competitor, saw rapid growth by exploiting loopholes and engaging in aggressive trading strategies. This allowed them to generate high profits in the short term. However, when SEBI launched an inquiry and audited the intermediaries involved, market flow was penalised for insider trading, while Finvest Securities was praised for upholding ethical standards.

Quoting lines from the above paragraph, identify and explain two regulatory functions and two protective functions of SEBI as discussed in the case above.

Case Study 15

R Ltd. is a real estate company that was formed in 1950. In about 56 years of its existence, the company has managed to carve out a niche for itself in this sector. 

Lately, this sector has been witnessing a boom due to the fact that the Indian economy is on the rise. 

The incomes of the middle class are rising. More people can afford to buy homes for themselves due to the easy availability of loans and accompanying tax concessions.

To expand its business in India and abroad, the company weighs various options to raise money through equity offerings in India. 

Whether to tap the equity or debt market, whether to raise money from the domestic market, the international market, or a combination of both? When to raise the necessary finance from the money market or the capital market? It is also planning to list itself on the New York Stock Exchange to raise money through ADRs.

To make its offerings attractive, it is planning to present a flow of financial plans and products to its stakeholders and investors, and also expand its listing on the stock exchange after complying with the regulations of SEBI.

1. What benefits will the company derive from listing at the stock exchange?
2. What are the regulations of SEBI that the company must comply with?
3. How does the SEBI exercise control over R Ltd. in the interest of investors?

The End

Do you want to practice case studies of Nature and Significance of Management? Click here for them.