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Depository Class 10 Questions and Answers provides important questions with simple and easy-to-understand answers on the concept of depositories. It covers key topics such as dematerialisation, electronic holding of securities, Depository Participants (DPs), and the role of depositories in the securities market. These questions are useful for Class 10 students for learning, revision, and exam preparation.
Depository Class 10 Questions and Answers
Q. Mr. Sandeep, a new investor, is interested in investing in the stock market. He has learned about the advantages of holding securities in electronic form and has decided to open a demat account. To do this, he approached a local financial institution called “Arron Financials”, which is a registered Depository Participant with both NSDL and CDSL. Arron Financials helps him open a demat account and dematerialize his physical shares. Who serves as the intermediary between the depository and the investors ? (CBSE 2025-26)
(A) Stock Exchange
(B) Clearing Corporation
(C) Registrar and Transfer Agent
(D) Depository Participant
Answer: (D) Depository Participant
Q. Mr. Anil owns 500 physical shares of XYZ Ltd. He wants to sell them on the stock exchange but is worried about the risks of holding physical certificates. He needs a quicker and safer way to trade. What should Mr. Anil do ? (CBSE 2025-26)
(A) Sell the physical share certificates at stock exchange.
(B) Transfer the physical shares to XYZ Ltd. and then sell them.
(C) Open a Demat account with a Depository Participant (DP) and dematerialize his share before selling.
(D) Ignore the risks and sell the shares as they are.
Answer: (C) Open a Demat account with a Depository Participant (DP) and dematerialize his share before selling.
Q. It is essential to recognise the implications of these options to fully understand the impact of dematerialisation. Clearly identify which of the following is NOT a benefit of dematerialisation ? (CBSE 2025-26)
(A) Faster trading and settlement
(B) Reduced paperwork
(C) Increased trading cost
(D) Lower risk of loss or theft of certificates
Answer: (C) Increased trading cost
Q. Which of the following provides dematerialization of securities ? (CBSE 2024-25)
(A) Reserve Bank of India (RBI)
(B) National Securities Depository Limited (NSDL)
(C) National Stock Exchange (NSE)
(D) Securities Exchange Board of India (SEBI)
Answer: (B) National Securities Depository Limited (NSDL)
Q. It is like a bank wherein the securities are deposited in electronic form : (CBSE 2024-25)
(A) Demat Account
(B) Depository
(C) RBI
(D) NSE
Answer: (B) Depository
Q. Electronic holdings can be converted into physical certificates. This process is known as __________. (CBSE COMP 2024-25)
(A) Dematerialisation
(B) Rematerialisation
(C) Materialisation
(D) Documentation
Answer: (B) Rematerialisation
Q. It keeps the client informed of corporate actions taken or to be taken by the issue of securities, having a bearing on the benefits or rights accruing to the client. (CBSE 2024-25)
(A) Depository Participant
(B) Bank
(C) Financial Institution
(D) Custodian
Answer: (D) Custodian
Q. Assertion (A) : Dematerialised shares have distinctive numbers.
Reason (R) : These shares are fungible, which means that all the holdings of a particular security will be identical and interchangeable. (CBSE COMP 2024-25)
Options :
(A) Both (A) and (R) are true and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.
Answer: (D) (A) is false, but (R) is true.
Q. Statement-1 : Depository facilitates securities between accounts on the instruction of the account holder. (CBSE 2023-24)
Statement-2 : Depository also holds funds in account.
(a) Both Statement-1 and Statement-2 are true.
(b) Both Statement-1 and Statement-2 are false.
(c) Statement-1 is false, but Statement-2 is true.
(d) Statement-1 is true, but Statement-2 is false.
Answer: (d) Statement-1 is true, but Statement-2 is false.
Q. Assertion (A) : The Depository has prescribed minimum balance. (CBSE 2023-24)
Reason (R) : Investors can have zero balance in their demat account.
(a) Both (A) and (R) are true and (R) is correct explanation of (A).
(b) Both (A) and (QR) are true and (R) is not correct explanation of (A).
(c) (A) is true, but (R) is false.
(d) (A) is false, but (R) is true.
Answer: (d) (A) is false, but (R) is true.
Q. List two services that depository participants offer to investors. (CBSE 2025-26)
Answer: Depository Participants (DPs) offer the following services to investors:
- They open and maintain Demat accounts for investors.
- They facilitate transfer and holding of securities in electronic form.
Q. Depository Participants (DPs) open investor accounts, in which they hold the securities that they have bought in dematerialised form. Brokers and Banks offer DP services to investors. DPs help investors receive and deliver securities when they trade in them. While the securities when they trade in them. While the investor level accounts in securities are held and maintained by the DP the company level accounts of securities issued is held and maintained by the depository. Who can be depository participants ? Mention two depositories in India. (CBSE 2024-25)
Answer:
The Depository Participants are –
- Banks
- Financial Institutions
- SEBI-registered Trading Members (Brokers)
Two Depositories in India:
- National Securities Depository Limited (NSDL)
- Central Depository Services (India) Limited (CDSL)
Q. What is meant by ‘ISIN’ ? (CBSE COMP 2024-25)
Answer: ISIN (International Securities Identification Number) is a unique identification number assigned to a security. It helps in identifying securities in electronic transactions.
Q. What do you understand by ‘Dematerialisation’ ? (CBSE 2022-23)
Answer: Dematerialisation is the process of converting physical share certificates into electronic form. The securities are credited to the investor’s Demat account with a Depository Participant (DP).
Q. Hold the fund in account. (CBSE 2022-23)
(a) Bank
(b) Depository
(c) Demat
(d) Cash
Answer: (a) Bank
Q. Describe the process of dematerializing of shares. (CBSE 2022-23)
Answer: The process of dematerialisation involves the following steps:
- The investor fills a Dematerialisation Request Form (DRF) available with the Depository Participant (DP).
- The DRF is submitted along with the physical share certificates.
- A separate DRF is filled for each ISIN.
- The DP forwards the request for verification.
- After verification, the physical certificates are converted into electronic form.
- The securities are credited to the investor’s Demat account.
Thus, dematerialisation converts physical shares into electronic securities for safe and convenient holding.
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