CBSE Class 12th Business Studies Revision Notes - N10

Free Business Studies - Class 12th (CBSE) - Revision Notes - N10 - Financial Markets

Financial Markets

• A Financial Market is a market for the creation and exchange of financial assets.
• An economic system consists of two main sectors - households which save funds and business firms which invest these funds.
• A financial market helps to link the savers and the investors by mobilizing/Moving funds between them. (Allocative Function)
• It allocates or directs funds available for investment into their most productive investment opportunity. The process by which the allocation of funds is done is called financial intermediation.
• Financial markets exist wherever a financial transaction occurs.
• Financial transactions could be in the form of creation of financial assets such as the initial issue of shares and debentures by a firm or the exchange of existing financial assets like equity shares, debentures and bonds.

Functions of the Financial Markets

1. Allocative function  A financial market facilitates the transfer of savings from savers to investors. It gives savers the choice of different investments and thus helps to channelize surplus funds into the most productive use.
2. Facilitating Price Discovery In the financial market, households are suppliers of funds and business firms represent the demand. The interaction between the forces of demand and supply helps to establish a price for a financial asset being traded in the financial market.
3. Providing Liquidity to Financial Assets Financial markets facilitate easy purchase and sale of financial assets. Holders of assets can readily sell their financial assets through the mechanism of the financial market.
4. Reducing the Cost of Transactions Financial markets provide valuable information about securities being traded in the market. It helps to save time, effort and money that both buyers and sellers of a financial asset would have to otherwise spend to try and find each other. The financial market is thus a common platform where buyers and sellers can meet for the fulfilment of their individual needs.

Types of Financial Markets

Money Market

• Money market is a market for short-term funds which deals in assets whose period of maturity is up to one year. It enables the raising of funds for meeting the temporary shortages of cash and obligations and the temporary deployment/usage of excess funds for earning returns.
• A money market is a market where low-risk, unsecured and short-term debt instruments that are highly liquid are issued and actively traded every day. It has no physical location, but is an activity conducted over the telephone and through the Internet.
• Major Participants in the Money Market are:

1. The Reserve Bank of India (RBI)
2. Non-Banking Finance Companies
3. Large Corporate Houses
4. Commercial Banks
5. State Governments
6. Mutual Funds

• Instruments of Money Market are:

1. Treasury Bill
2. Commercial Paper
3. Certificate of Deposit

Capital Market

• Capital market refers to institutional arrangements through which medium and long-term funds, both debt and equity are raised and invested.
• It does not deal with channelizing savings for less than one year.
• The capital market transfers money from savers to entrepreneurial borrowers/business.
• The capital market makes use of different intermediaries such as brokers, underwriters, depositories etc. These intermediaries act as working organs of the capital market and are very important elements of the capital market.

Differences Between the Money Market and The Capital Market

Types of Capital Market

Primary Market (New Issue Market)

• It deals with new securities being issued for the first time.
• Primary capital market directly contributes to capital formation because in primary market company goes directly to investors and utilizes these funds for investment in buildings, plants, machinery etc.
• Method of Flotation of Securities in Primary Market

1. Public Issue Through Prospectus
2. Offer for Sale
3. e-IPOs (Electronic Initial Public Offer)

Secondary Market (Stock Exchange)

• The Secondary market is the market for the sale and purchase of previously issued or existing securities.
• Under this market, the securities are not directly issued by the company to investors.
• The securities are sold by existing investors to other investors.
• Sometimes the investor needs cash, and another investor wants to buy the shares of the company as he could not get it directly from the company.
• Then both investors can meet in the secondary market and exchange securities for cash through an intermediary called a broker.

Differences between Primary Market & Secondary Market

Stock Exchange

Stock exchange is defined as an organization constituted for the purpose of assisting, regulating/controlling of business of buying, selling and dealing in securities.

Functions of Stock Exchange/Secondary Market

1. Safety of Transactions - In the stock market, only the listed Securities are traded.
2. Contributes to Economic Growth - In the stock exchange, existing securities of various companies are bought and sold. This process of disinvestment and reinvestment helps to invest in the most productive investment proposal, and this leads to economic growth.
3. Spreading of Equity Cult - Stock exchange encourages people to invest in Equity by better trading practices and educating the public about investment.
4. Promotes the Habits of Savings and Investment - The Stock market encourages people to save more and invest in securities rather than investing in gold, silver, etc.
5. Pricing of Securities - Share prices on a ‘Stock Exchange’ are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation and it provides instant information to both buyers and sellers in the market.

Steps in the Trading Procedure on a Stock Exchange

1. Selection of the Broker
2. Opening a DEMAT account
3. Placing an Order
4. Match the Share and Best Price
5. Executing the Order
6. Issue of Contract Note
7. Delivery of Shares and Making Payments
8. Settlement

1. Selection of the Broker - The buying and selling of securities can only be done through SEBI-registered brokers who are members of the stock exchange. The broker can be an individual, partnership firm or corporate bodies.
2. Opening a DEMAT account - The broker opens a trading account in the name of the investor after taking details such as PAN number; Date of birth and address; Educational qualification and occupation; Residential status; Bank account details; Name of any other broker with whom registered.
3. Placing an Order -The order can be placed with the broker either personally or through phone, email, etc. The Investor must place the order very clearly specifying the range of prices at which securities can be bought or sold.
4. Match the Share and Best Price - The broker will then go online and connect to the stock exchange and match the share and best price available.
5. Executing the Order - When the shares can be bought and sold at the price mentioned, it will be communicated to the broker terminal, and the order will be executed electronically. The broker will issue a trade confirmation slip to the investor.
6. Issue of Contract Note - After the trade has been executed the broker issues the contract note within 24 hours. This note is an important legal document as it helps to settle disputes or claims between investors and the broker and contains the details like No. of shares bought and sold, price, date, time of the deal, brokerage charges.
7. Delivery of Shares and Making Payments - Now the investor must deliver the shares sold or pay cash for the shares bought to the broker. This should be done immediately after receiving a contract note. This is called pay-in-day.
8. Settlement - Cash is paid or securities are delivered to the stock exchange by the broker on pay-in-day, the stock exchange will deliver the shares or make payment to the other broker. This is called pay-out day. The broker must make payment to the investor within 24 hours of the pay-out day. The broker can make delivery of shares in Demat form directly to the investor's Demat Account.

  Depositories

• A depository is an institution or an organisation which holds securities.
• At present in India, there are two depositories a) NSDL (National Securities Depository Ltd.) b) CDSL (Central Depository Services Ltd.) Ø There is no direct contact between the depository Depositories National Securities Depository Ltd. Central Depository Services Ltd. Investor and the investor. The depository interacts with investors through depository participants only.

Dematerialization

• Dematerialisation refers to holding securities in electronic form. For this purpose, the investor must open a Demat Account and SEBI has now made it mandatory to trade in Demat Form.
• Holding shares in Demat form is very convenient as it is just like a bank account.
• Various securities of different companies can be held in a single Demat account.
• This is mainly done to eliminate problems associated with share certificates like theft, fake transfers etc.

SEBI (Securities Exchange Board of India)

• SEBI was set up in 1988 to regulate the functions of the securities market.
• With the growth in the dealing with stock markets, lots of malpractices also started in the stock markets Such as price rigging, unofficial premium on new issue, delay in delivery of shares, violation of rules and regulations of the stock exchange.
• Due to these malpractices, customers started to lose confidence and faith in the stock exchange. Hence the government of India decided to set up an agency to protect the interest of investors.

      Objectives of SEBI  

•        To develop a code of conduct for intermediaries like brokers. 
•        To regulate stock exchanges. 
•        To protect the rights and interests of investors

Functions of SEBI

Protective Functions are performed by SEBI to protect the interest of investor and provide safety of investment.

a) Check a Price Rigging: Price rigging refers to manipulating the prices of securities with the main objective of inflating or depressing the market price of securities. SEBI prohibits such practices because this can defraud and cheat the investors.

b) It Prohibits Insider Trading: An insider is any person connected with the company such as Directors, Promoters etc. These insiders have sensitive information which affects the prices of securities.

c) SEBI Prohibits Fraudulent and Unfair Trade Practices: SEBI does not allow the companies to make misleading statements which are likely to induce the sale or purchase of securities.

d) SEBI Spreads Awareness by Educating Investors: SEBI undertakes steps to educate investors so that they can evaluate the securities of various companies and select the most profitable Securities.

 

     Developmental functions are performed by SEBI to promote and develop activity in the stock exchange.

a) SEBI promotes training of intermediaries of the securities market .

b) SEBI has permitted internet trading through registered stockbrokers.

Regulatory functions are performed to regulate the Stock exchange.

a) SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries such as bankers, brokers, underwriters etc.

b) SEBI registers and regulates the working of stockbrokers, sub-brokers, share transfer agents, and all others who are associated with the stock exchange in any manner.

c) SEBI regulates takeover of the companies.

d) SEBI conduct inspections and audit of the stock exchange.

e) SEBI registers and regulates the working of mutual funds etc. 

The End

Have you finished the entire revision of the notes? Do you want to learn more? Below are the revision notes for the following:

• Marketing Management
• Financial Management
• Organising
• Consumer Protection

Mexico Imposing 50% Tariff on Asian Countries: Explained

Mexico's 50% Tariff on Asian Countries: A Complete Guide

First, it was America, and now Mexico is imposing 50% tariffs on Asian countries like India, China, and South Korea from 2026.

As every government wants to protect its local markets, the Mexican government has imposed these tariffs at a higher rate to:

• Make Asian goods more expensive in Mexico (local market)
• Protect Mexican factories (local manufacturing hubs) from international competition
• Generate more tax income for the Mexican government

You might be curious to know the complete story behind it, so let’s unravel it in our blog.

Quick Navigation

• What Did Mexico Do?
• Real-World Examples
• Learning for Students
• Quick Summary

💡 Tip: A tariff is a tax that a country charges when goods enter from another country. Think of it like a fee or entry tax at the border.

What Did Mexico Do?

• Mexico’s lawmakers have approved new import tariffs (taxes paid at the border) on more than 1,400 products coming from Asian countries.
• These tariffs are applicable to those countries that do not have a free trade agreement with Mexico.
• The tariffs range from 5% to 50%.
• The affected items will be from Asian regions:
• Cars
• Auto parts 
• Textiles
• Clothing
• Plastics
• Steel
• Footwear
• Electronics​

How Much Revenue Will be Collected?

Mexico’s finance ministry estimates these tariffs will bring in about 52 billion pesos (around 2.8–3.8 billion US dollars) in extra revenue in 2026.

Explaining the Situation with Real-World Examples

Example 1: Indian Cars in Mexico

Before the tariff:

• Hyundai exports a car from India to Mexico for $15,000
• Mexican customer pays $15,000
• Profit goes to the company

After the 50% tariff:

• Same car now has a 50% tax added = $7,500 extra cost
• Mexican customer must pay $22,500 (or the company loses $7,500 in profit)
• Result: Fewer people buy Indian cars → Indian companies lose business

Aspect	Before Tariff	After Tariff
Car Price	$15,000	$15,000
Tariff (Tax)	$0	$7,500 (50%)
Total Price	$15,000	$22,500
Customer Impact	Affordable	More Expensive
Company Impact	More Sales	Fewer Sales

​

Example 2: Electronic Parts from India

An Indian company ships electronic components worth $100,000 to Mexico.

Stage	Amount
Original value	$100,000
Tariff at 30%	$30,000
Total cost for buyer	$130,000

Now Mexican factories have to pay 30% extra, so they either reduce profit or increase the final product price.

---

Learning for Students

According to Business Studies:

Mexico is using protectionism. It means protecting its own companies from foreign competitors by making foreign goods expensive.

​For Companies:

• Indian exporters lose customers to Mexican competitors
• Mexican companies get breathing room to sell more
• Some companies may decide to set up factories in Mexico instead of exporting

Who Benefits	Who Loses
Mexican car makers	Indian car makers
Mexican electronics factories	Indian electronics exporters
Mexican workers	Asian exporters' jobs at risk

According to Economics:

How prices change:

• Imported goods become more expensive
• Mexican goods (that don't have tariffs) look cheaper
• Customers buy more local, less foreign

Supply and Demand:

• Price of foreign goods ↑ (due to tariff)
• Demand for foreign goods ↓
• Demand for Mexican goods ↑

For the government: Mexico earns tax money but may face trade wars if other countries retaliate.​

According to Accountancy:

For an importing company's accounts:

If a company imports goods worth ₹100 from India:

• Cost of Goods = ₹100
• Customs Tariff (50%) = ₹50
• Total Cost in Books = ₹150

When this is sold later, the higher cost reduces profit.

Item	Amount
Sales Revenue	₹200
Cost of Goods (including tariff)	₹150
Gross Profit	₹50 (was ₹100 before tariff)
Loss = 50%	Profit drops by half

Quick Summary

• What: Mexico added 5-50% tax on Asian goods starting 2026
• Why: To protect Mexican businesses and jobs
• Effect: Asian products become expensive; Mexican products become more competitive; profits of exporters drop; customers pay more

The End​

CBSE Class 12th Business Studies Question Paper - TS3 (5 Question Papers)

Free Business Studies - Class 12th (CBSE) - TS3 (5 Question Papers Included) - Business Environment

Here are the quick details:

• Class: XII
• Subject: BUSINESS STUDIES
• Time: 45 minutes
• Maximum Marks: 20
• Chapter Name: Business Environment
• Marking Scheme: One, three, four, and six marks

Below are the links to the tests:

• Test 1
• Test 2 (Coming Soon)
• Test 3 (Coming Soon)
• Test 4 (Coming Soon)
• Test 5 (Coming Soon)

Test 1

• Time: 45 minutes
• Maximum Marks: 20

Q1. __________ is considered a major element of the political environment: (Choose the correct alternative) (1 mark)

1. The extent and nature of government intervention in business
2. Planned outlay in the public and private sectors
3. Expectations from the workforce
4. Administrative order issued by government authorities

Q2. Which of the following is not a component of the economic environment of business? (1 mark)

1. Interest rates 
2. Inflation rates
3. Literacy rates 
4. Rates of savings and investments.

Q3. Identify the dimensions of the business environment illustrated by the picture in which Sapna, who has joined the workforce recently, is working on an accounting software. (1 mark)

1. Technological and social
2. Technological and political
3. Political and economic
4. Social and legal

Q4. 

• Assertion (A): Economic, social, political, legal, and technological conditions are the specific forces of the business environment.
• Reason (R): Economic, social, political, legal, and technological environments have an impact on all business enterprises and thus may affect an individual firm only indirectly. (1 mark)

1. Both Assertion (A) and Reason (R) are true.
2. Both Assertion (A) and Reason (R) are false. 
3. Assertion (A) is true, and Reason (R) is false.
4. Assertion (A) is false, and Reason (R) is true. 

Q5. State any three features of ‘demonetisation’. (3 marks)

Q6. The Government is considering a pioneering proposal to launch a single debit-cum-credit card to increase the ease and use for consumers. The card, which will be called the “National Mobility Card,” will have unique advantages for making payments in metro, buses, parking, and making transactions during visits abroad. After hearing this news, Mega Bank decided to launch a “Mega Mobility Card” on similar lines, so that they could be the first to exploit the opportunity arising due to the increasing trend of digitization. In order to improve their performance, they laid down a plan to hire more people in their marketing department and prepared guidelines to train their sales force to market the new card facility being launched by the bank. By quoting the lines, identify and explain any three points of importance of understanding the Business Environment discussed above. (3 marks)

Q7. National Digital Library of India (NDL India) is a pilot project initiated by the HRD ministry. It works towards developing a framework of a virtual repository of learning resources with a single-window search facility. It provides support to all academic levels, including researchers, life-long learners, and differently abled learners, free of cost. Identify and explain two dimensions of the business environment highlighted above. (4 marks)

Q8. Define business environment. State any five features of the business environment. (6 marks)

The End

News Update on Netflix and Warner Bros. Discovery Deal

Netflix and Warner Bros. Discovery 2025 Deal Details

On December 5th, 2025, Netflix and Warner Bros. broke the internet with their official deal. In this collaboration, Netflix will acquire the rights to Warner Bros content.

This is the biggest deal in the entertainment industry!

Let’s read more about this historic moment in a case study format in our blog.

💡 Update: Paramount Studios is trying (hostile bid) to buy Warner Bros for $108 billion.

📚 Quick Navigation

• Introduction
• Company Backgrounds
• Deal Details
• Reasons
• Risks
• Class 11-12 Learning

Introduction

Netflix has valued Warner Bros. at USD $72 billion and agreed to pay about USD $82.7 billion dollars.

The contract includes the following:

• All the movie titles, such as Harry Potter, Batman, Superman, Wonder Woman, etc.
• The entire section of TV series, such as Ballers, Game of Thrones, The Sopranos, The Wire, Succession, The White Lotus, Chernobyl, True Detective, Curb Your Enthusiasm, and Big Little Lies, etc.
• The complete hold of the HBO channel
• Max streaming service
• Film studios

💡 Note: WBD will separate its cable‑TV networks (like CNN, Discovery Channel) into another company (Discovery Global), which Netflix is not buying.

Company Backgrounds

Netflix is one of the largest OTT streaming platforms in the world, particularly famous for its original shows like Stranger Things and Squid Game.

On the contrary, Warner Bros. is already famous for its movie series, such as Harry Potter.

Let’s find out more about them in the table below.

Point	Netflix	WBD – Studios & Streaming
Founded	Founded in 1997 in the United States	Founded as Warner Bros studio in 1923
Main business	Online streaming of films, series and games worldwide.	Film and TV production plus streaming via HBO and Max (HBO Max).
Key brands	Stranger Things, The Crown and other Netflix Originals, plus licensed shows.	Harry Potter, DC Universe, Game of Thrones and classic Warner Bros titles.
Model	Subscription streaming with ad‑supported plans.	Cinema, TV licensing, streaming (Max) and advertising.
Scale pre‑deal	Market value around 440 billion USD in 2025.	Market value 60–65 billion USD; studios & streaming unit valued at 72 billion USD.
Role in deal	Buyer, paying in cash and stock.	Seller of studios, HBO, Max and related libraries.

Key Deal Details and Valuations

Company	Approx. value before deal (4 Dec 2025)	Approx. value with/after deal
Netflix	Around 440 billion USD market value before the deal.	Remains the same as before.
Warner Bros Discovery (WBD)	About 61 billion USD stock‑market value for the whole company before the announcement.	Netflix values the studios & streaming unit at 72 billion USD in equity, or about 82.7 billion USD including debt.

Reasons for Netflix-Warner Bros. Deal

For Netflix:

• The deal brings control of famous franchises (such as DC, Harry Potter, and HBO series) and a deeper content library under one roof.
• A potential to gain more subscribers and viewership globally.
• Before this acquisition, WBD had already licensed older HBO shows such as Insecure, Ballers, Six Feet Under and others to Netflix, which performed well on the OTT platform.

For Warner Bros Discovery:

• Selling the streaming rights and studios at a premium to Netflix.
• Reducing liabilities for Warner Bros, as it has already reported USD $34 to 35 billion of net debt on its balance sheet in 2024.

Risks Associated with Netflix-Warner Bros. Deal

As this is the largest deal in the entertainment industry, it must pass strict competition checks because:

• This agreement could reduce choice and bargaining power for rivals.
• Execution risks might leads to:
• Mixing cultures of two different companies
• Managing large debt
• Deciding how Netflix will manage theatrical releases and online streaming for future Warner Bros. films

💡 Tip: To understand this concept via video, click this link.

Learning from the Netflix–Warner Bros Deal for Class 11th & 12th

Subject	Key Takeaways
Business Studies	✓ External growth through acquisition ✓ How business environment affects strategy ✓ Capital structure decisions in big deals ✓ Managing organizational culture after mergers
Accountancy	✓ Understanding debt on balance sheets ✓ Difference between book value and market value ✓ What is goodwill and why companies pay extra
Economics	✓ Oligopoly market structure in streaming ✓ How mergers affect competition and prices ✓ Impact on employment and investment

The End

CBSE Class 12th Business Studies Question Paper - TS12 (5 Question Papers)

Free Business Studies - Class 12th (CBSE) - TS12 (5 Question Papers Included) - Consumer Protection

As a consumer, our first priority is to receive the best quality of the product at MRP (maximum retail price).

To make CBSE class 12th students learn about these concepts, we have built a set of five question papers.

Here are the quick details:

• Class: XII
• Subject: BUSINESS STUDIES
• Time: 45 minutes
• Maximum Marks: 20
• Chapter Name: Consumer Protection
• Marking Scheme: One, three, four, and six marks

Below are the links to the tests:

• Test 1
• Test 2 (Coming Soon)
• Test 3 (Coming Soon)
• Test 4 (Coming Soon)
• Test 5 (Coming Soon)

Test 1

Q1. Under which consumer right does a business firm set up a consumer grievance cell? (Choose the correct alternative) (1 mark)

1. Right to safety
2. Right to be heard
3. Right to seek redressal
4. Right to consumer education

Q2. Identify the responsibility that a consumer fulfils when he looks for the quality marks given above: (1 mark)

1. Assert yourself to ensure that you get a fair deal
2. Getting a proper receipt
3. Buy only standardised products
4. Be honest in your dealings

Q3. Shweta went to a reputed beauty salon to highlight her hair. She was told by the beautician that if she agrees to the package of ₹ 5,000, then she will get two hair spas worth ₹ 1,200 each, free. Shweta agreed to the offer. While highlighting her hair, the beautician spilt chemical on Shweta's face, and it went inside her left eye. Shweta was in pain. When she went to the doctor, she was diagnosed with cornea inflammation. Later, she gave a legal notice to the beautician, accusing her of a lack of expertise. Identify the consumer right that is violated in the above case. (1 mark)

1. Right to Safety
2. Right to be Assured
3. Right to Seek Redressal
4. Right to be Informed

Q4. Navya went to a supermarket for grocery shopping. She bought one kg of bajra flour from the supermarket. On reaching home, when she opened the packet, she found worms inside it. She was disappointed and told her son the same. Her son asked her to check the label. When she checked the label of the packet, she found that the bajra flour was stale and beyond the expiry date. She approached the salesperson at the supermarket, who replaced the bajra flour immediately. When she thanked the salesperson, she was told that it was the policy of the supermarket to satisfy the customers. He further said that satisfied customers not only lead to repeat sales, but they also provide good feedback to prospective customers, which helps in increasing the customer base of the business. Identify the point of importance of consumer protection from the point of view of the supermarket, which is helping them to increase the customer base: (1 mark)

1. Long-term interest of the business
2. Moral justification
3. Social responsibility
4. Government intervention

Q5. Suman bought a box of cheese from a reputed brand from a local shopkeeper. On opening the box, she found a piece of stone in the cheese. She reported the matter to the shopkeeper, who forwarded her complaint to the concerned company. Within a week, the representative of the company visited Suman's residence with an apology and, as a replacement, offered her a new cheese pack with four other varieties of cheese as compensation for the inconvenience to her. Identify and explain the consumer right that Suman exercised. (3 marks)

Q6. Deepak purchased a book from a book-seller and got the cash memo of ₹400, which he paid for the book. Later, he found that the actual price of the book is ₹380, but the book-seller had put a sticker of ₹ 400 on the original price. Can Deepak recover the extra money that he paid? What other options are available to him against the book-seller if he is refused to be given back the extra money he paid? (3 marks)

Q7. Tanya purchased some household goods from a 'General store'. After reaching home, she found a face cream that she had not billed for. After checking the date of expiry and other details, she started using it. Her face burned due to the use of the cream. Where should Tanya file a complaint? Justify. Under the Consumer Protection Act, 2019, who can file a complaint? (4 marks)

Q8. Indian Youth Organisation (IYO) organised a visit of its members to an old age home to inculcate the habit of social work among them. The visit revealed that the living conditions of the inmates of the old age home were not hygienic. So the IYO members decided to clean the premises. During their cleanliness drive, they realised that the old-age home also required pest control. But some of the inmates of the old age home were reluctant to it because they believed that the pest control might create health problems for them. IYO, therefore decided to provide ethical, safe and odourless pest control. They showed inmates of an old age home a pamphlet of the proposed pest control product, which promised easy, inexpensive and long-lasting pest control. The inmates happily agreed, and the pest control was carried out. It worked for a fortnight, but to their dismay, the effect started wearing off. IYO contacted the pest control company, which kept postponing its visit. After waiting for a month, IYO filed a case in the consumer court. The consumer court was satisfied about the genuineness of the complaint and issued necessary directions to the pest control company. State any six directions that might have been issued by the court. (6 marks)

The End

• If you are unable to solve all of the questions above, click here to read the easy revision notes for Consumer Protection and improve your knowledge level.
• Do you want to solve more questions for Planning and score well in your CBSE Class 12th Business Studies? Click here for the Planning questions.