Question

SUBJECT TESTING-I (Direct Questions)
Describe the following terms relating to stock exchange.
(1) Listing of Securities (2) Jobber (3) Trading Ring (4) Stock broker (5) Abull (6) Bear (7) Stag (8) Contract Note (9) Auction (10) Institutional investor

Answer 1

(1) Listing of Securities : Listing means incorporating the name of the company for security in the official register of the stock exchange. Listing is not compulsory. But listed securities are only dealt in stock exchanges. Listing help companies to get broader market for their securities. When an individual investor and even speculators try to play shy in stock market, it is the institution investor who often accounts for bulk of trade. This help sustaining of stock exchanges.
(2) Jobber : He is a dealer in stock exchange who carries on trading of securities in his own name. He is a professional speculator in the stock exchange. He carries on trading only with the broker. He is not permitted to deal with investor directly.
(3) Trading Ring : The trading or auction of shares takes place on the floor of the stock exchange also known as 'Trading Ring'. Trading take place during trading hours i.e., between 12:00 to 2:30 p.m. in most of the stock exchanges.
(4) Stock Broker : He is a commission agent who transacts business on behalf of non members but he is member o stock exchange who is licensed by stock exchange to buy or sell share on his client's behalf.
(5) A Bull : He is also known as 'Tejiwala'. He expects a rise in the price of a certain security and buys it for selling in future at higher price to earn profits. His views are optimistic.
(6) Bear : He is also known as 'Mandiwala'. He expects a fall in the price of security. He buys the shares at the expected lesser price and sells at the little higher price. He may incur loss if the price of that security further reduces.
(7) Stag : A stag is cautious speculator. He is not like bull or bear. He tries to purchase the shares of a new company in more number. He hopes hike in a price and can sell at premium. He earns profit if price goes up while, he has to incur a loss when price falls down. He does not invest in the secondary market but prefers to invest in primary market.
(8) Contract Note : It is a note given by the broker to the client. It will be in a specific form. It validates the transaction. Contract note is an official note enforceable by law. Both the broker and client will have one copy each. After the transaction within 24 hours.
(9) Auction : The method of making offers and bid for shares or determining the prices of securities by the auction of buyer and sellers transacting at specified location.
(10) Institutional Investor : LIC, Mutual Funds, Unit Trust's investment in shares and bonds are termed as institutional investors who trade in large volumes. They play supportive role when share market is bearish. When an individual investor and even speculators try to play shy in stock market (hesitate to transact) it is the institutional investor who often accounts for bulk of trade. IT helps in sustaining for the stock exchange.