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1. Ans:-

What is Stock Exchange? Write about the nation wide stock exchanges. Stock Exchanges are the exclusive centers for trading of securities. It is also called as body of persons, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. There are two Stock Exchanges nation wide. They are: Exchange Type NSE BSE Full Name National Stock Exchange Bombay Stock Exchange Trading System National Exchange Automated Trading (NEAT System). BSE on Line Trading (BOLT System).

2. Ans:-

What is Stock Index? Write about the computation of the Stock Index? Index is an indicator of broad market. Any index is an average of its constituents. Stock index represents the changes in value of a set of stocks which constitute the index over a base year. The Stock Index is computed in two ways: a) Price Index: - The price index is a simple arithmetical average of share prices with a base date. This index gives the idea about the general price movement of the Constituents that reflects the entire market. b) Wealth Index: - In wealth index price are weighted by market capitalization. In this index, the base period values are adjusted for subsequent rights & bonus offers.

3.

Write about the two index of NSE & BSE? Write the main factors that different between the two Index.

Ans:- The indexes of two Stock Exchanges of India are: Stock Exchanges a) National Stock Exchange (NSE) b) Bombay Stock Exchange (BSE) Indexes a) Nifty b) Sensex

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The differences between the two indexes are: a) The Number of the Component Stock: It influences the behavior of index. If the number of the component Stock is larger, it would be a representative sample capable of reflecting the market movement. b) The Composition of the Stocks: It reflects the market movement as well as the macro economic changes. So it changes the composition of the index to reflect the market movement. c) The Weights: It also influences the movement of index. The indices may be weighted with the price or value. The stocks with higher price influence the index more than the low priced stock. d) Base year: The time period from which relative levels of index are measured. The choice of Base year also leads to variations among the index. The Base year differs from each other in the various indices. The base year should be free from any unnatural fluctuation in the market. The Sensex has the base year as 1978-1979 & the S & P CNX Nifty has the base year as November 1995.

4.

What is the usefulness of index? (1) (2) (3) (4) Indices help to recognize the broad trends in the market. Index can be used as a benchmark for evaluating the investors portfolio. Indices function as a status report on the general economy. Impacts of the various economic policies are reflected on the Share Market. The investor can use the indices to allocate funds rationally among stocks. To earn returns on par with the market returns, he can choose the stock that reflect market movement.

Ans:- Usefulness of index:-