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Secondary Market Class 10 Questions and Answers provides important questions with simple and easy-to-understand answers on the secondary market. It covers key concepts such as buying and selling existing securities, stock exchanges, investors, brokers, and the role of the secondary market. These questions are useful for Class 10 students for understanding the topic, revision, and exam preparation.
Secondary Market Class 10 Questions and Answers
Q. Are bonds assessed based on their credit quality ? (CBSE 2025-26)
(A) No, bonds are assessed based on their credit quality.
(B) Yes, bonds are assessed based on their credit quality.
(C) No, most bond and debenture issuances are rated by specialized credit rating agencies.
(D) Yes, RBI is an identity which assesses the bond and debenture issuances.
Answer: (B) Yes, bonds are assessed based on their credit quality.
Q. Secondary market comprises of ________ and the ________. (CBSE 2024-25)
(A) Equity market, Debt markets
(B) Equity market, Commodity markets
(C) Debt markets, Commodity markets
(D) Currency market, Equity markets
Answer: (A) Equity market, Debt markets
Q. Statement-I : On account of non-delivery of securities by the trading member on the pay-in day, the securities are put up for auction by the exchange. (CBSE 2024-25)
Statement-II : The exchange purchases the requisite quantity in auction market and gives them to the buying trading member.
(A) Statement-I is true, but Statement-II is false.
(B) Statement-I is false; but Statement-II is true.
(C) Both Statement-I and Statement-II are false.
(D) Both Statement-I and Statement-II are true.
Answer: (D) Both Statement-I and Statement-II are true.
Q. Assertion (A) : Secondary markets enable price discovery of traded securities. (CBSE COMP 2024-25)
Reason (R) : Secondary markets provide liquidity and marketability to existing securities.
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: (B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Q. NSE is the first exchange in the world to use satellite communication technology for trading. Its trading system is called : (CBSE COMP 2024-25)
(A) FLIP
(B) ODIN
(C) BLOT
(D) NEAT
Answer: (D) NEAT
Q. NSE introduced a nationwide, on-line, fully-automated trading system where a member can punch into the computer the quantities of a security and the price at which he would like to transact, and the transaction is executed as soon as a matching sale or buy order from a counter party is found. This trading system is referred as : (CBSE 2023-24)
(a) Source Based Trading System (SBTS)
(b) Screen Bound Trading System (SBTS)
(c) Screen Based Trading System (SBTS)
(d) Screen Based Trade System (SBTS)
Answer: (c) Screen Based Trading System (SBTS)
Q. “The market which deals in securities previously issued” is called ___________. (CBSE 2022-23)
(a) Primary Market
(b) Debt Market
(c) Secondary Market
(d) Commodity Market
Answer: (c) Secondary Market
Q. The trading system of NSE is called : (CBSE 2022-23)
(a) BOLT
(b) NEAT
(c) ODIN
(d) FTEC
Answer: (b) NEAT
Q. Trading at the exchange offers investors (CBSE 2023-24)
(a) The best prices prevailing at time in the market
(b) Lack of any counter party risk
(c) Access to investor grievance and redressal mechanism
(d) To do trading in the unlisted securities.
Answer: (a) The best prices prevailing at time in the market
Q. The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. How was this deficiency of the trading system overcome ? (CBSE COMP 2024-25)
Answer: To overcome the problems of the open outcry system, NSE introduced a nationwide online and fully automated Screen Based Trading System (SBTS). In this system, buy and sell orders are entered through computers and matched electronically. This made trading faster, more efficient and transparent.
Q. Rohan, a diligent investor, strategically purchases 100 shares of Titan Ltd. through a reputable broker on a stock exchange. Once the trade is executed, the broker promptly issues a detailed contract note to Rohan, documenting the transaction and serving as conformation of his investment. (CBSE 2025-26)
(1) What is the purpose of a contract note in the secondary market ?
Answer: A contract note is a written confirmation of the trade executed by a broker on behalf of the client. It serves as a legal document between the investor and the broker regarding the purchase or sale of securities.
(2) How does a contract note contribute to transparency and accountability in the secondary market ?
Answer: A contract note contains complete details of the transaction such as quantity, price, brokerage, taxes and trade time. It helps investors verify their transactions and provides evidence in case of any dispute with the broker.
Q. Explain the following : (CBSE 2024-25)
(a) The function of clearing corporation
Answer: A Clearing Corporation performs the following functions:
- Clears and settles all transactions executed on the stock exchange.
- Provides financial guarantee for trades.
- Performs risk management functions and ensures smooth settlement of securities and funds.
(b) Types of return received by investor in equities
Answer: Investors receive returns from equities in two forms:
- Capital Appreciation – Increase in the market value of shares over time.
- Dividend – Part of the company’s profit distributed to shareholders.
Q. Under rolling settlement, all open positions at the end of day mandatorily result in payment/delivery ‘n’ days later. Currently, trades in rolling settlement are settled on T+2. What does T and +2 stand for ? (CBSE COMP 2024-25)
Answer:
- T stands for the Trade Day, the day on which the transaction takes place.
- +2 means the settlement of the trade is completed two working days after the trade day.
Q. If an investor looks at a computer screen for a quote on stock of say XYZ Ltd., it might look something like this : (CBSE COMP 2024-25)
Bid (Buy side) Ask (Sell side)
Qty. Price (₹) Price (₹) Qty.
1000 50·25 50·35 2000
500 50·10 50·40 1000
550 50·05 50·50 1500
2500 50·00 50·55 3000
1300 49·85 50·65 1450
Total 5850 8950
(a) What do you mean by ‘Ask Price’ and ‘Bid Price’ ?
Answer:
- Bid Price: It is the price at which a buyer is willing to buy a security.
- Ask Price: It is the price at which a seller is willing to sell a security.
(b) Identify the best Bid order from the above table.
Answer: The best Bid order is 1000 shares at ₹50.25, because it is the highest buying price.
(c) Identify the best Sell order from the above table.
Answer: The best Sell order is 2000 shares at ₹50.35, because it is the lowest selling price.
Q. Describe any two advantages of the Secondary Market. (CBSE 2023-24)
Answer:
- The secondary market provides liquidity to investors by enabling them to buy and sell securities easily.
- It helps in price discovery and provides a fair market value for securities.
Q. The secondary market provides opportunities of capital appreciation for companies and investors on a fairly unbiased basis. The secondary market is a platform, usually run by an exchange, where both retail and institutional buyers and sellers come together to trade in securities. The secondary market ensures liquidity for investors. Investors and promoters can sell their securities to get cash. It also presents opportunities for interested buyers to buy securities for investment. In context of the para, describe the two advantages of secondary market. (CBSE 2023-24)
(a) Define depository participants.
Answer: Depository Participants (DPs) are agents of a depository who provide depository services to investors.
(b) Who can be depository participants ?
Answer: The following entities can become Depository Participants:
- Banks
- Financial Institutions
- SEBI-registered Trading Members (Brokers)
Q. What does ‘Listing agreement’ mean ? (CBSE 2022-23)
Answer: A Listing Agreement is an agreement between a company and a stock exchange at the time of listing securities. It specifies the terms and conditions of listing and the disclosures that the company must make regularly.
Q. “A contract note is a confirmation of trade on a particular day issued for and, on behalf of, a client by a registered broker of a stock exchange.” Explain information required to be mentioned on the contract note issued by the stock broker. (CBSE 2022-23)
Answer: A contract note should contain the following information:
- Name, address and SEBI registration number of the broker.
- Contract note number and date.
- Name and code number of the client.
- Order number, trade number and trade time.
- Quantity and price of securities bought or sold.
- Brokerage, GST, Securities Transaction Tax (STT) and other charges.
- Signature of the authorised signatory of the broker.
These details help investors verify their transactions and ensure transparency in trading.
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