Category: Class 12

Balbharti Maharashtra State Board Class 12 Psychology Solutions Chapter 4 Cognitive Processes Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Psychology Solutions Chapter 4 Cognitive Processes

1. Choose the correct option and complete the following statements.

Question 1.
When we select few stimuli from the environment and bring them into the center of our awareness, it is called ……………
(a) attention
(b) perception
(c) thinking
Answer:
(a) attention

Question 2.
Ivan Pavlov is known for explaining learning by …………..
(a) classical conditioning
(b) operant conditioning
(c) observation
Answer:
(a) classical conditioning

Question 3.
When we organise the information from the environment, group them and give some meaning, that process is called ……………..
(a) attention
(b) perception
(c) thinking
Answer:
(b) perception

Question 4.
In operant conditioning the experiment was conducted on ……………
(a) dog
(b) rat
(c) monkey
Answer:
(b) rat

Question 5.
The change in behaviour due to practice or experience is known as ……………
(a) perception
(b) thinking
(c) learning
Answer:
(c) learning

2. Answer the following questions in 35 – 40 words each.

Question 1.
What is fluctuation of attention?
Answer:
Attention is the mental process of bringing few stimuli into the centre of awareness out of the many stimuli present. It is difficult to attend to a single stimulus for a long period of time. Our attention shifts from the original stimulus to another stimulus for a fraction of time and then comes back to the original stimulus. This may be due to factors like fatigue, decreased interest, etc. In most cases, attention fluctuates due to the limitations of human attention and hence cannot be totally eliminated.

Question 2.
Give three examples of top-down processing in perception.
Answer:
Perception is defined as the process of assigning meaning to information received about the environment based on the past experiences. We make use of both top-down processing and bottom- up processing while perceiving a stimulus. When we utilize top-down processing, our ability to understand information is influenced by the context in which it appears.

Some examples of top-down processes in perception are-
(a) Mr. Kumar lives in Flat A not in Flat
The circled item will be perceived as the letter B as the brain has used the context of the sentence.

(b) If you are asked to identify (a) the rat (b) the man, your perception will be likewise.
(c) the huamn mnid deos not raed ervey lteter by istlef but the wrod as a whole.

Most of you would be able to correctly read the above sentence as “The human mind does not read every letter by itself but the word as a whole”.

Question 3.
What is meant by thinking?
Answer:
Thinking is the mental activity that uses various cognitive elements and processes that involves the manipulation of information.
The core elements of thinking are-

1. Mental representation – It is a coded internal sensation acquired by direct experiences through the sense organs or by indirect experiences such as narrations, pictures, etc.
2. Concepts – They form the basis for all cognitive processes, acting as building blocks by connecting with each other to form more complex concepts.
3. Schema – It is an internal representation that organizes knowledge about related concepts and relationships among them.
4. Language – Mental representations, concept and schema are represented by language, for e.g., the word ‘cat’ is a symbol for a ‘cat’.

Question 4.
Describe any two processes of learning.
Answer:
Learning is defined as a relatively permanent change in behaviour that occurs due to experience or practice. The characteristics of learning are : (i) It involves some relatively permanent change in behaviour, (ii) The change in behaviour is due to experience or practice, (iii) Change in behaviour may be in knowledge or in skill or in muscular movements, (iv) Learning is an inferred process. The main processes of learning are:
(i) Learning by classical conditioning – It was first explained by Ivan Pavlov. It is learning by forming associations and stimulus substitution. In daily life, we learn many things by classical conditioning for e.g. a child is given an injection by the doctor and begins to cry in pain. He soon makes the connection between ‘doctor’, ‘injection’ and ‘pain’ and begins crying as soon as he is taken to a doctor.

(ii) Learning by operant conditioning – Learning by operant conditioning was first explained by B. F. Skinner. He said that learning takes place to gain positive consequences or to avoid negative consequences.

3. Classify the following into Mental Representation, Concepts and Schemata.

(1) Image of your mother in your mind
(2) Building
(3) Tree
(4) School
(5) Theater
(6) Table
(7) Neil Armstrong
Answer:

Mental Representation	Concepts	Schemata
Image of your mother in your mind	Building	School
Neil Armstrong	Tree	Theatre
	Table

4. Find the odd one out.

Question 1.
Schema, Perception, Attention, Thinking
Answer:
Schema

Question 2.
Searching solution, Defining problem, Incubation, Implementation of the solution
Answer:
Incubation

Question 3.
Reasoning, Judgement, Decision making, Relaxing
Answer:
Relaxing

Question 4.
Concept, Schema, Solution, Mental Representation
Answer:
Solution

5. Identify if the following behaviours are due to learning or not. Give reasons for your answers.

Question 1.
After much hard work you are able to perform a dance step properly.
Answer:
It is due to learning as it involves a relatively permanent behavioural change due to practice.

Question 2.
In spite of getting hurt, Shayana, a five year old child, continues to play with knife.
Answer:
It is not learning as in spite of an unpleasant experience, there is no change in behaviour.

Question 3.
Once Hanif had to pay fine for breaking the signal while driving a car. Now he makes sure to stop the car at red signal.
Answer:
It is due to learning as Hanif has made an association between breaking the signal and paying a fine, i.e., negative consequences.

6. Answer the following questions with the help of given points.

Question 1.
Explain the stages of problem solving.
Points:
(i) Defining problem
(ii) Generating alternative solutions
(iii) Selecting a solution
(iv) Implementing and taking follow up of the solution.
Answer:
Problem solving is a type of thinking. It refers to the process of finding appropriate solutions to problems encountered in life. The main steps in problem solving are:
(i) Defining the problem – We need to identify and define the problem correctly. Otherwise, it will be difficult to reach a solution, for e.g., when a baby cries due to colic/stomach ache and if the mother interprets it as due to hungry, the problem will remain unresolved.

(ii) Generation alternative solutions – The person searches for possible solutions to the problem. Some solutions may be effective while other solutions have to be discarded, for e.g., Sunil finds maths difficult. He may think of solving more sums or of taking tuitions or of dropping the subject, etc.

(iii) Selecting a solution – The person selects what he considers the most effective solution, based on reasoning. This helps to resolve the problem in a realistic manner.

(iv) Implementing the solution and follow up on the solution – The person tries out the selected solution and evaluates the outcome i.e. whether it has helped to solve the problems. If the problem remains unresolved, the person may need to carry out the problem – solving procedure all over again.

Question 2.
Explain the stages of creative thinking.
Points:
(i) Preparation
(ii) Incubation
(iii) Illumination
(iv) Verification
Answer:
Creative thinking is characterised by the ability to perceive the world in new ways, to find hidden patterns, etc. It is a way of looking at problems or situations from a fresh/novel perspective. In involves divergent thinking that focuses on exploration of ideas and generating many possibilities. It is referred to as “thinking outside of the box.” Researchers, poets, designers, film makers always think in a creative way.

The four stages in creative thinking are-
(i) Preparation – This involves formulating the problem and gathering information about it. Many tentative solutions are tried out and discarded. No progress seems to be made by the person.

(ii) Incubation – If the person does not get the required results, he/she may focus on things unrelated to that problem. The period helps to work out the problem without consciously thinking about it. Incubation period appears to be non-fruitful.

(iii) Illumination – After incubation, suddenly the correct solution appears to the person, due to which he/she experiences excitement. It seems that a solution has fallen into place.

(iv) Verification – The new solution may need to be evaluated a number of times. In most cases, minor changes will be required but sometimes it may demand a major overhaul of the entire process.

For e.g., A teacher asks the students to think of unusual uses for a bottle.

• The students will begin brainstorming.
• The students will come up with many uses for e.g., to store liquids, to hold plants, etc. But these are not unusual uses. They will give up and focus on something else.
• The students will suddenly find novel uses for the bottle e.g., in juggling etc.
• The students will verify these solutions with their teacher.

7. Answer the following questions in detail.

Question 1.
Explain the laws of perceptual organization.
Answer:
Perception is defined as the process of assigning meaning to information received about the environment based on the past experiences. Our brain has the tendency to organize our sensations as a meaningful whole. Max Wertheimer first explained this tendency in the form of laws of perceptual organization.

Some laws of perceptual organization are as follows:
(i) Law of proximity – Stimuli that are near to each other are perceived as together, rather than stimuli that are far away from each other.

In the above figure, we perceive pairs of dots in each line because the dots which are near to each other are perceived together. So instead of perceiving a line of 8 dots, generally a line of four pairs of dots is perceived.

(ii) Law of similarity – Stimuli that are similar to each other are perceived together than stimuli that are distinct from each other.

In the above figure, we perceive 4 alternate vertical lines each of circles and crosses as similar stimuli are perceived together. Generally, we do not perceive 4 horizontal lines each having circles and crosses in alternate sequence.

(iii) Law of continuity – There is a tendency to perceive a stimulus in continuation according to its established direction.

In the above figure, a straight vertical line and a straight horizontal line are perceived together as a letter ‘L’ and a cutting line is perceived separately as a line following the smoothest path. Generally, we do not perceive here four different lines going in different directions.

(iv) Law of closure – There is a tendency to fill in the gaps in an incomplete stimulus so as to perceive it as a meaningful figure.

In the above figure, we fill in the gaps and perceive it as a triangle and square. Generally, we do not perceive here the three or four separate lines going in different directions.

Question 2.
Explain the core elements of thinking.
Answer:
Thinking is the mental activity that makes use of ideas or symbols instead of overt activity. The types of thinking are (i) Perceptual (concrete) thinking, (ii) Conceptual (abstract) thinking (iii) Reflective thinking, (iv) Creative thinking.
The core elements in thinking are-
(i) Mental representation – It is a coded internal sensation acquired by direct experiences through the sense organs or by indirect experiences such as narrations, pictures, etc. Mental representation is the mental imagery with the help of which the brain codes and stores the information. It is like a hypothetical internal cognitive symbol used by the brain to represent external reality. Example: a child is asked to imagine a peacock. The visual image of a peacock with its colouful plumage immediately comes to mind. This refers to “mental imagery” of an object.

(ii) Concepts – They form the basis for all cognitive processes, acting as building blocks by connecting with each other to form more complex concepts. Concepts involve extraction of some ‘idea’ on the basis of similarities and differences among the sensations. A concept is an idea which represents a class of objects, situations, etc which differentiates it from other classes of objects, situations, etc., for e.g. a child forms a mental image of a ‘dog’. He derives an idea of something similar in all examples of ‘dog’ that he has seen i.e. tail, fur, barking, etc. Thus, he has formed concept of dog. If he mistakenly identifies as a cat as a dog. he is corrected by others. So he tries to compare the mental images of dogs and cats. He has now learned and refined two concepts viz. dog and cat.

(iii) Schema – It is an internal representation that organizes knowledge about related concepts and relationships among them. Schema involves arranging many concepts in a particular system or organisation. It describes a pattern of thought or behavior that organises categories of information and the relationships among them. A child tries to organise the concepts that he has learned in a systematic way to generate a higher order understanding of patterns about information collected, for e.g. when a child visits a ‘zoo’ for the first time, images and concepts such as of different animals, caves/cages, etc., are activated in the brain simultaneously. Thus, he is forming the schema of ‘zoo’.

Conclusion:- Mental representation is sensory experiences in the form of mental images in the brain. Many similar mental representations denote concepts while many concepts put in a particular relationship to each other is schema.

Question 3.
With the help of your own examples explain the difference between distraction of attention and fluctuation of attention.
Answer:
Attention is the selective process by which we focus on only a few stimuli from among the various stimuli that are present in our environment. According to Norman Munn, “Attention is the mental process of bringing few stimuli into the center of awareness out of the many stimuli present”. Attention is influenced by objective factors such as intensity, size, movement, etc., of stimuli as well as subjective factors like interest, mindset, etc.

The distraction of attention refers to the drifting of attention from a specific stimulus to another stimulus. This occurs due to external factors such as intensity, novelty, movement, etc., of stimuli or internal factors like physical state, lack of interest, mental set, etc.

It is difficult to attend to a single stimulus for a long period of time. Our attention shifts from the original stimulus to another stimulus for a fraction of time and then come back to the original stimulus. This is called fluctuation of attention. It may be due to factors like fatigue, decreased interest, etc.

In most cases, fluctuation of attention is due to the limitations of human attention whereas distraction of attention is due to an external powerful stimulus that has drawn our attention. When attention fluctuates, it is for a very short period of time and then it returns to the original stimulus, i.e., it is a temporary shift in attention, e.g., look at the below figure. Attention fluctuates on observing the figure as a closed book or open book.

The distraction of attention arises when you are studying and the doorbell suddenly rings, you get up to answer the door. You may or may not be able to return to the original stimulus. Fluctuation of attention cannot be controlled totally but the distraction of attention should be avoided.

Class 12 Psychology Chapter 4 Cognitive Processes Intext Questions and Answers

ACTIVITIES (Textbook Page. No. 33)

Activity 1
Read the following examples and try to name the cognitive process described in each of them:

1. Reena immediately sensed the burning smell of pizza put in the oven.
2. Mahesh always pays attention to what the psychology teacher teaches in class.
3. Professor Mr. Patil met one of his former students all of a sudden. He tried to recall the name of his student.
4. Saif was reading a storybook and so he forgot to complete his homework.
5. After considering all pros and cons, Dinesh took the decision of changing his business.

Answer:

1. Sensation
2. Attention
3. Perception, Memory
4. Forgetting
5. Reasoning, Decision making.

Balbharti Maharashtra State Board Class 12 Psychology Solutions Chapter 3 Personality Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Psychology Solutions Chapter 3 Personality

1. Choose the correct option and complete the following statements.

Question 1.
A person who is shy and reserved is called an ……………..
(a) introvert
(b) extrovert
(c) ambivert
Answer:
(a) introvert

Question 2.
The Ink-Blot test was developed by psychologist ………………….
(a) Murray
(b) Rorschach
(c) Morgan
Answer:
(b) Rorschach

Question 3.
……………….. traits are the dominant characteristics of a person.
(a) Cardinal
(b) Secondary
(c) Central
Answer:
(a) Cardinal

2. Match the Pair

Question 1.

Group A	Group B
(1) Self-report technique	(a) Interview
(2) Behavioural analysis	(b) MMPI
(3) Projective methods	(c) Permanent characteristics
	(d) TAT

Answer:

Group A	Group B
(1) Self-report technique	(b) MMPI
(2) Behavioural analysis	(a) Interview
(3) Projective methods	(d) TAT

3. State whether the following statements are true or false.

Question 1.
Personality is merely related to external appearance.
Answer:
False

Question 2.
People with high neuroticism are emotionally reactive.
Answer:
True

Question 3.
Children from families having a warm emotional atmosphere are well adjusted.
Answer:
True

4. Explain the concepts in 25 – 30 words each.

Question 1.
Personality
Answer:
The word personality is derived from the Latin word ‘persona’ which was used to refer to masks worn by actors during a stage performance, Thus, the meaning of personality was interpreted as ‘projected behaviour’ of an individual.

According to Gordon Allport, “Personality is the dynamic organization within the individual of those psychophysical systems that determines his unique adjustments to the environment.” According to Norman Munn, “Personality is a unique combination of individual’s physical structure, needs, interests, abilities and aptitudes.”

Question 2.
Trait
Answer:
A trait is a relatively enduring and consistent way of thinking, feeling and acting. It is some distinctive characteristic of the person that leads him/her to behave in more or less consistent ways across situations and over a period of time. Allport categorised traits as: (i) Cardinal Traits (single, dominant trait) (ii) Central Traits (core or basic traits) (iii) Secondary Traits

Question 3.
Sentence Completion Test
Answer:
Sentence Completion Test (SCT) is a type of projective technique used to assess personality. The individual is given a series of incomplete sentences and is asked to complete them in his/her own words, for e.g., My mother, My greatest fear is It is assumed that the endings provided by the person will reflect their motivation, urges, internal conflicts etc.

Question 4.
Structured interview
Answer:
Interview is a process in which the interviewer collects information about the personality of an interviewee by asking him/her specific questions. The main types of interview depending on the purpose of assessment are – structured and unstructured interview.

In structured interview, the number, type and sequence of questions to be asked are pre-determined. The answers expected from the interviewee are also specific. This type of interview is used where exact quantification is required, for e.g., industrial psychologists use structured interviews to select employees for a job.

Question 5.
Unstructured interview
Answer:
Interview is a process in which the interviewer collects information about the personality of an interviewee by asking him/her specific questions. The main types of interview depending on the purpose of assessment are – structured and unstructured interview.

In unstructured interview, the type and sequence of questions to be asked by the interviewee are not pre-determined. Detailed answers can be given and scoring is often subjective. It is employed by clinical psychologists, counsellors, etc.

5. Write short notes on the following in 50 – 60 words each.

Question 1.
Gordon Allport’s trait theory of personality.
Answer:
The word personality is derived from the Latin word ‘persona’. According to Gordon Allport, “Personality is the dynamic organization within the individual of those psychophysical systems that determines his unique adjustments to the environment.”

A trait is a relatively enduring and consistent way of thinking, feeling and acting. It is some distinctive characteristic of the person that leads him/her to behave in more or less consistent ways across situations and over a period of time. Allport categorised traits as Cardinal traits, Central traits and Secondary traits.
(i) Cardinal Traits – It is a single trait that dominates the individual’s personality. Every action of the person can be traced to the influence of this trait, for e.g., in case of Gandhiji honesty is the cardinal trait, in case of Napoleon, the cardinal trait was ambition.

(ii) Central Traits – These traits are ‘core’ traits or ‘basic’ characteristics that form the building blocks of personality. There are about 5-10 traits such as sensitivity, sociability, diligence, etc., that can best describe an individual’s personality.

(iii) Secondary Traits – These traits play a minor role in personality as they appear only in specific situations or under specific circumstances. They are sometimes related to preferences or attitudes.

Question 2.
Effect of mass media on personality development.
Answer:
The word personality is derived from the Latin word ‘persona’ which was used to refer to masks worn by actors during a stage performance, Thus, the meaning of personality was interpreted as ‘projected behaviour’ of an individual.

According to Gordon Allport, “Personality is the dynamic organization within the individual of those psychophysical systems that determines his unique adjustments to the environment.”

The psycho-social factors that have an effect on personality include heredity, family, peer group, culture and mass media. Mass media includes print media e.g., newspapers; audio-visual media e.g., T.V. and new media e.g., internet. Media is a source of information, education, entertainment and even socialization. It has a considerable effect on our value system, behaviour patterns and personality. However, excessive dependence on media may lead to egocentrism, poor academic performance, difficult in concentration, sleep disturbance, etc.

6. Answer the following questions with given points in 100 – 150 words each.

Question 1.
Explain the Big Five Factors model of Personality.
Points:
(i) Openness to experience
(ii) Conscientiousness
(iii) Extroversion
(iv) Agreeableness
(v) Neuroticism
Answer:
The word personality is derived from the Latin word ‘persona’ which was used to refer to masks worn by actors during a stage performance, Thus, the meaning of personality was interpreted as ‘projected behaviour’ of an individual.

According to Gordon Allport, “Personality is the dynamic organization within the individual of those psychophysical systems that determines his unique adjustments to the environment.” According to Norman Munn, “Personality is a unique combination of individual’s physical structure, needs, interests, abilities and aptitudes

The Five Factor Model of or Big Five Personality theory, based on the trait perspective proposed by Robert McCrae and Paul Costa. The five broad trait factors are-

1. Openness to Experience
2. Conscientiousness
3. Extroversion
4. Agreeableness
5. Neuroticism.

1. Openness to Experience – People who are open to experience are intellectually curious imaginative, appreciative of art, sensitive to beauty. They sometimes tend to think and act in nonconforming, adventurous ways. Individuals who score low on openness to experience tend to be conventional, resistant to change and prefer familiarity and routine. They may lack creativity and aesthetic sense.

2. Conscientiousness – It concerns the way in which people control, regulate and direct their impulses. People high in conscientiousness are hardworking, disciplined, responsible, dependable, etc, while those low on conscientiousness tend to be careless, unorganised, spontaneous, undisciplined, etc.

3. Extroversion – Extroversion is marked by pronounced engagement with the external world. People high on this trait are assertive, talkative, sociable, enthusiastic, etc. Individuals showing low extroversion tend to be shy, reserved, lack the activity levels of extroverts. They are low-key and disengaged from the social world.

4. Agreeableness – It refers to the ability of a person to get along with others and show a concern for social harmony. People high on this trait tend to be friendly, cooperative, generous and believe that people are basically decent and trustworthy. Persons low on agreeableness tend to be uncooperative, suspicious, even hostile and jealous.

5. Neuroticism – It refers to a tendency to experience negative emotions such as anger, anxiety or depression more intensely and for longer periods than normally experienced by others. Those who score high on neuroticism tend to be irritable, fearful, emotionally unstable and interpret ordinary situations as threatening and hopeless. People who score low in neuroticism are less emotionally reactive and hence tend to be calmer, emotionally stable and experience more of positive feelings.

Question 2.
Explain the factors influencing personality.
Points:
(i) Family
(ii) School
(iii) Peer group
(iv) Culture
Answer:
The word personality is derived from the Latin word ‘persona’ which was used to refer to masks worn by actors during a stage performance, Thus, the meaning of personality was interpreted as ‘projected behaviour’ of an individual.

According to Gordon Allport, “Personality is the dynamic organization within the individual of those psychophysical systems that determines his unique adjustments to the environment.” According to Norman Munn, “Personality is a unique combination of individual’s physical structure, needs, interests, abilities and aptitudes

Personality is shaped by biological factors such as heredity and hormones secreted by endocrine glands as well as psychosocial factors such as family, school, peer group, culture, mass media, etc.

(i) Family – As the first agency of socialization, the family exerts a strong influence on personality. Aspects of family such as family structure, atmosphere, and relationships, family interactions and childrearing practices influence personality, for e.g., if parents show rejection or over protection, etc., towards the child it leads to low self-esteem and adverse effects on the personality. A family with a warm emotional atmosphere and where parents adopt democratic discipline and show love, respect and concern for the children will positively influence the child’s personality, i.e., boost self-esteem.

(ii) School – Various aspects of school such as teaching-learning process, academic and co- curricular facilities, role of the teachers, school location, management and discipline, etc., influence the child’s personality, for e.g., teachers who are well qualified, creative, build a rapport which the students, tend to motivate students and help them to develop a good personality.

(iii) Peer group – It refers to individuals of the same age group, e.g., classmates or sharing the same interests, e.g., members of a sports club. Influence of the peer group is most noticed in adolescence since it serves as a reference group. The influence of peer group on the person may be positive such as developing healthy gender attitudes, skills of communication, etc., or it may be negative e.g., developing aggressive tendencies, prejudices, etc.

(iv) Cultural factors – Culture refers to the customs, values and social behaviour of a particular society. Every culture has its own set of beliefs, norms, expectations, etc., which influence the thoughts, feelings and behaviour of its members.

Question 3.
Explain the various methods of personality measurement.
Points:
(i) Behavioural analysis
(ii) Self-report technique
(iii) Projective method
Answer:
The word personality is derived from the Latin word ‘persona’ which was used to refer to masks worn by actors during a stage performance, Thus, the meaning of personality was interpreted as ‘projected behaviour’ of an individual.

According to Gordon Allport, “Personality is the dynamic organization within the individual of those psychophysical systems that determines his unique adjustments to the environment.”

According to Norman Munn, “Personality is a unique combination of individual’s physical structure, needs, interests, abilities and aptitudes. Personality can be assessed using techniques such as Self Report measures (inventories), Behavioural Analysis Techniques and Projective techniques.

(i) Behavioural Analysis Techniques
Behavioural Analysis techniques such as Interview and Observation can provide information about an individual’s personality in a variety of situations.
(a) Interview – It is a process in which the interviewer collects information about the personality of an interviewee by asking him/her specific questions. The main types of interview depending on the purpose of assessment are- Structured and unstructured interview.

• Structured interview – The number, type and sequence of questions to be asked in the interview are pre-determined. The answers expected are also specific. This type of interview is used where exact quantification is required, for e.g., industrial psychologists use structured interviews to select employees for a job.
• Unstructured interview – The type and sequence of questions to be asked by the interviewer are not pre-determined. Detailed answers can be given and scoring is often subjective. It is employed by clinical psychologists, counsellors, etc.

(ii) Self-Report Technique (Inventories)
The individual provides information about his/her personality by responding to statements/ questions on the inventory, for e.g., Minnesota Multiphasic Personality Inventory (MMPI), 16 Personality Factor Questionnaire (16 PFQ), etc. Responses are scored in quantitative terms and interpreted on the basis of norms that are developed for the test.

(iii) Projective Techniques
Projective techniques emerged from the psychoanalytic perspective. The individual responds freely to relatively unstructured or ambiguous stimuli/material. It is assumed that individuals project their own personality onto these stimuli, often revealing personal conflicts, coping styles, etc. Projective techniques cannot be scored in an objective manner. They use various materials like ink-blots, ambiguous pictures, incomplete sentences, word associations, etc. Main projective techniques include Rorschach’s Ink-Blot Tests, Thematic Apperception Test (TAT), Sentence Completion Test, etc.

Class 12 Psychology Chapter 3 Personality Intext Questions and Answers

ACTIVITIES (Textbook Page. No. 23)

Activity 1

Read the following examples and express your opinion about the concept of personality:
(i) Rohan is a good looking boy. He is a genius, but extremely arrogant. He always shouts at his friends. He always talks very rudely to his parents.
(ii) Ruchi is a girl with ordinary looks. She is poor in her studies but always gets along nicely with her friends. She always talks in a polite manner to everyone.
Answer:
[Information based question – refer textbook page no. 23 (3.1)]

Activity 2 (Textbook Page. No. 24)

Look at the list given below and discuss which of these factors have a stronger influence in shaping personality :
(i) Nutritious diet (ii) Junk food (iii) Physique (iv) Exercise (v) Technology (vi) Peer group (vii) Parents (vii) Neighbours (ix) Relatives (x) Childhood experiences.
Answer:
All the given factors tend to shape our personality. However, parents, peer group, physique, childhood experiences tend to exert greater influence.

Activity 3 (Textbook Page. No. 25)

Think how the peer group may influence you with respect to factors given below:
(i)Hairstyle (ii) Dressing style (iii) Eating habits (iv) Study habits (v) Communication skills (vi) Attitudes (vii) Decision making (viii) Likes and dislikes, etc
Answer:
The peer group refers to individuals who are of the same age or who tend to share similar interests. Peer group influences personality tremendously in late childhood and in adolescence. This may be in regard to physical appearance like hairstyle and dressing style. Peer group also influences how we interact with others i.e., interpersonal aspects like communication skills, decision-making, attitudes as well as personal preferences eating habits, study habits, like/dislikes, etc.

Activity 4 (Textbook Page. No. 27)

Make two separate lists of jobs requiring more need of talking and jobs requiring less need of talking. Try to find out which of your friends will be suitable for these two types of jobs.
Answer:
Jobs requiring more need of talking.

1. Teacher
2. Salesperson
3. Human resource manager
4. Lawyer
5. Event planner

Jobs requiring less need of talking.

1. Writer
2. Computer programmer
3. Librarian
4. Accountant
5. Researchers.

Activity 5 (Textbook Page. No. 29)

Use observation method and try to get few ideas of the personalities of the following individuals:

1. Traffic controller
2. News reporter
3. Private detective
4. Interior designer
5. Nurse
6. Teacher

Answer:

1. Traffic controller – He/she must have physical stamina, mental agility, negotiation skills, organizational skills.
2. News reporter – He/she must have curiosity, alertness, courage, language skills, empathy.
3. Private detective – He/she must be trustworthy, persistent, sociability, technological skills.
4. Interior designer – He/she must have creativity, interpersonal skills, aesthetic skills, communication skills.
5. Nurse – He/she must show empathy, stamina, communication skills, diligence, interpersonal skills.
6. Teacher – He/she must have good interpersonal and communication skills, be patient, creative.

Balbharti Maharashtra State Board Class 12 Psychology Solutions Chapter 2 Intelligence Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Psychology Solutions Chapter 2 Intelligence

1. Choose the correct option and complete the following statements.

Question 1.
……………………. has given formula of I.Q.
(a) Binet
(b) Stern
(c) Wechsler
Answer:
(b) Stern

Question 2.
…………………. has given the concepts of fluid intelligence and crystallized intelligence.
(a) Cattell
(b) Thorndike
(c) Salovey
Answer:
(a) Cattell

Question 3.
…………………. is an individual test of intelligence.
(a) Army Alpha Test
(b) Army Beta Test
(c) Block Building Test
Answer:
(c) Block Building Test

2. State whether the following statements are true or false.

Question 1.
Verbal tests of intelligence can be given easily to illiterate people.
Answer:
False

Question 2.
It is possible to increase emotional intelligence.
Answer:
True

Question 3.
There are certain limitations to Artificial Intelligence.
Answer:
True

Question 4.
Group tests of intelligence are less expensive.
Answer:
True

3. Answer the following in one sentence each.

Question 1.
What is meant by intelligence?
Answer:
David Wechsler defines intelligence as, “the aggregate or global capacity of an individual to act purposefully, to think rationally and to deal effectively with his environment.”

Question 2.
Who is considered as the father of intelligence test?
Answer:
Alfred Binet is considered as the father of intelligence tests.

Question 3.
What is meant by verbal tests of intelligence?
Answer:
Verbal tests of intelligence make use of words and numbers to measure intelligence and subjects respond verbally to the test items, for e.g., WAIS, Army Alpha Test, etc.

Question 4.
What is meant by individual test of intelligence?
Answer:
Individual tests of intelligence are tests which can be administered to a single person at a time, for e.g., Stanford Binet Scales, WAIS, Koh’s Block Design Test, etc.

4. Define / Explain the concepts in 25 – 30 words each.

Question 1.
Mental Age
Answer:
Alfred Binet introduced the concept of Mental Age. It is defined as the age at which the person successfully performs on all items of the test prepared for that age level. Mental Age need not correspond to Chronological Age. If Mental Age (MA) is the same as Chronological Age (CA), the person has average intelligence. For e.g., Sumit aged 10 years has successfully performed all items on the test for age 12. Hence, his Mental Age will be 12 years, i.e., he has above average intelligence.

Question 2.
Social Intelligence
Answer:
E.L. Thorndike proposed the term Social Intelligence. Howard Gardner included ‘interpersonal intelligence’in the Multiple Intelligences Theory. According to Karl Albrecht, ‘Social intelligence . is the ability to get along well with others and to get them to cooperate with oneself.’

A continued pattern of nourishing behaviour indicates a high level of social intelligence. Such persons are skilled at interacting with and understanding people around them. They respect and encourage others. They effectively comprehend social dynamics.

Question 3.
Emotional Intelligence
Answer:
The term Emotional Intelligence was used for the first time by John Mayer and Peter Salovey. The concept of emotional intelligence was popularized by Daniel Goleman. It is defined as “the ability to perceive and monitor one’s own and others emotions, to discriminate among them and to use this information to guide one’s thinking and actions.” Emotional Intelligence refers to a set of cognitive abilities such as perceiving emotions, using emotions to facilitate thought, understanding emotions and managing (regulating) emotions. Persons with high emotional intelligence tend to be emotionally stable, patient, optimistic, enthusiastic and calm.

5. Write short notes on the following.

Question 1.
Intelligence Quotient
Answer:
Intelligence is the highest attribute of human beings. Different psychologists have defined intelligence differently. Lewis Terman explains intelligence as, “an ability to think on an abstract level.”

David Wechsler defines intelligence as, “the aggregate or global capacity of an individual to act purposefully, to think rationally and to deal effectively with his environment.”

Intelligence Quotient refers to a measurement of intelligence.. In 1912, William Stern introduced the concept of intelligence quotient (IQ). Terman, refined the formula for calculating IQ, which is as stated below-
IQ = \(\frac {MA}{CA}\) × 100
Example: Ankush who is 10 years old has a Mental Age of 11 years. Let us calculate his IQ.
MA = 11 years CA = 10 years IQ = ?
IQ = \(\frac {MA}{CA}\) × 100 = \(\frac {11}{10}\) × 100 = 110
Ankush has an IQ of 110.

Question 2.
Charles Spearman’s theory of intelligence
Answer:
Intelligence is the highest attribute of human beings. Different psychologists have defined intelligence differently. Lewis Terman explains intelligence as, “an ability to think on an abstract level.”
David Wechsler defines intelligence as, “the aggregate or global capacity of an individual to act purposefully, to think rationally and to deal effectively with his environment.”
In 1927, Charles Spearman with the help of a statistical method called factor analysis separated and identified two different factors of intelligence viz. General factor (g) and Specific factor (s).

1. General factor is the minimum competence required to carry out daily work.
2. Specific factor includes abilities which are required to solve problems in specific areas.

Question 3.
Verbal tests of intelligence
Answer:
Intelligence is the highest attribute of human beings. Different psychologists have defined intelligence differently. Lewis Terman explains intelligence as, “an ability to think on an abstract level.”
David Wechsler defines intelligence as, “the aggregate or global capacity of an individual to act purposefully, to think rationally and to deal effectively with his environment.”

On the basis of material used in the tests, intelligence tests can be classified as Verbal tests and Non-verbal tests of intelligence. Intelligence tests that use language (words or numbers) for measuring intelligence are called verbal tests of intelligence. In these tests subjects are required to respond verbally to test items. Army Alpha Test, Wechsler’s Adult Intelligence Scale (WAIS), etc., are some of the examples of verbal tests of intelligence. These tests are language and culture bound and hence cannot be used with children, illiterates etc. However, they are useful in measuring higher mental abilities.

Question 4.
Non-verbal tests of intelligence
Answer:
Intelligence is the highest attribute of human beings. Different psychologists have defined intelligence differently. Lewis Terman explains intelligence as, “an ability to think on an abstract level.”
David Wechsler defines intelligence as, “the aggregate or global capacity of an individual to act purposefully, to think rationally and to deal effectively with his environment.”
On the basis of material used in the tests, intelligence tests can be classified as Verbal tests and Non-verbal tests of intelligence.

Intelligence tests that use pictures, designs, material objects, etc., to measure intelligence are called non-verbal tests of intelligence. In these tests language is not used to measure intelligence. In these tests subjects are not required to respond verbally to test items. Non-verbal tests are of two types viz.

1. Performance tests for e.g., Koh’s Block Design test, Dr. Bhatia’s Non Verbal test, Alexander’s Pass-along test, etc. and
2. Paper-pencil tests for e.g., Raven’s Standard Progressive Matrices.

Question 5.
Artificial Intelligence
Answer:
The term Artificial Intelligence was suggested by John McCarthy. Artificial intelligence is an innovation created by human intelligence. It is a field of study that combines computer science, algorithms, psychology, etc. It refers to enabling software programmes and computer systems to perform tasks that normally require human intelligence, such as visual perception, speech recognition, weather forecasting, language translation, etc.

Artificial intelligence can take decisions only on the basis of stored information and so cannot be an alternative to human intelligence. Artificial intelligence has immense applications in daily life as well as to solve critical problems. Artificial intelligence is used in devices like robots, computers, self-driving cars, automatic missiles, smart phones, medical diagnostic tools, etc.

6. Answer the following questions with the help of the given points.

Question 1.
Write in brief about individual tests of intelligence
(i) Meaning
(ii) Advantages
(iii) Disadvantages
Answer:

(i) Meaning – Intelligence tests that can be administered to a single person at a time are called individual tests of intelligence, for e.g., Stanford Binet Scales, Koh’s Block Design Test, etc.

(ii) Advantages-

1. The test administrator can establish a rapport with the client.
2. The test administrator can get additional information about the client’s feelings, moods and expressions during testing.
3. Individual tests are more capable of measuring creative thinking, compared to group tests.

(iii) Disadvantages-

1. Individual tests are time consuming and costly to administer.
2. Individual tests require a trained and skillful examiner to administer, score and interpret them.
3. These tests cannot be used for mass testing.

Question 2.
Write in brief about group tests of intelligence
(i) Meaning
(ii) Advantages
(iii) Disadvantages
Answer:

(i) Meaning – Group test of intelligence are tests that can be administered to more than one person at a time, i.e., for mass testing, for e.g., Army Alpha and Army Beta Test, OTIS self¬administrating tests, etc.

(ii) Advantages-

1. Group tests are less time consuming and more economical to administer.
2. In administrating of group tests, the role of the examiner is minimal. So, he/she need not go through any specialised training.
3. These tests can be used in cases where mass testing is needed.

(iii) Disadvantages-

1. The test administrator has much less opportunity to establish rapport, obtain cooperation and maintain interest of the clients.
2. Compared to individual tests, group tests are less capable of measuring the creative aspect of intelligence.

7. Answer the following questions in Detail.

Question 1.
Write in detail about the history of intelligence testing.
Answer:
Intelligence is the highest attribute of human beings. Different psychologists have defined intelligence differently. Lewis Terman explains intelligence as, “an ability to think on an abstract level.”

David Wechsler defines intelligence as, ‘the aggregate or global capacity of an individual to act purposefully, to think rationally and to deal effectively with his environment’. Many psychologists have contributed to the measurement of Intelligence.

Sir Francis Galton thought that he could determine intelligence by measuring the size of the human skull. He administered a battery of tests to measure variables such as head size, reaction time, visual acuity, etc. However, these tests did not prove useful to measure intelligence.

Raymond Cattell, used the term ‘mental test’ for the first time. Like his mentor, Sir Galton, Cattell also believed that intelligence is best measured by sensory tasks. However, be emphasized that test administration must be standardized.

In 1905, Alfied Binet in collaboration with Theodor Simon, published the First Scale of Intelligence. This scale was revised in 1908 and 1911. In 1916, Lewis Terman revised the scale, i.e., adapted few items, established new age norms etc. This came to be called ‘Stanford Binet Test’. Binet also introduced the concept of Mental Age. It is defined as the age at which the person successfully performs on all items of the test prepared for that age level.

In 1917, Robert Yerkes and his colleagues developed the Army Alpha (verbal test) and Army Beta (performance test) intelligence tests. These two tests were used to recruit soldiers. In 1939, during World War II also, to recruit army personnel, the Army General Classification Test was used.

In 1939, David Wechsler published the Wechsler-Bellevue Intelligence Test. In 1955, the test was revised and then called Wechsler Adult Intelligence Scale (WAIS). It has a verbal scale and performance scale. Wechsler also developed a test to measure intelligence of children, i.e., Wechsler Intelligence Scale for Children (WISC).

Mental Age – Alfred Binet introduced the concept of Mental Age. It is defined as the age at which the person successfully performs on all items of the test prepared for that age level. Mental Age need not correspond to Chronological Age. It Mental Age (MA) is the same as Chronological Age (CA), the person has average intelligence.

Intelligence Quotient – In 1912, William Stern introduced the concept of Intelligence Quotient (IQ). Terman, refined the formula for calculating IQ which is as stated below-
IQ = \(\frac {MA}{CA}\) × 100 IQ made it possible to compare the intelligence of individuals of different age CA groups.

Question 2.
‘Intelligence testing has a wide usage in various areas’. Justify with examples.
Answer:
David Wechsler defines intelligence as, ‘the aggregate or global capacity of an individual to act purposefully, to think rationally and to deal effectively with his environment.’
Types of Intelligence Tests-
(i) Individual tests of intelligence-
Individual tests of intelligence are tests which can be administered to a single person at a time, for e.g., Stanford Binet Scales, WAIS, Koh’s Block Design Test, etc.

(ii) Group tests of intelligence-
Group test of intelligence are tests that can be administered to more than one person at a time, i.e., for mass testing, for e.g., Army Alpha and Army Beta Test, OTIS self-administrating tests, etc.

(iii) Verbal tests of intelligence-
Verbal tests of intelligence make use of words and numbers to measure intelligence and subjects respond verbally to the test items, for e.g., WAIS, Army Alpha Test, etc.

(vi) Non-verbal tests of intelligence-
Non-verbal tests of intelligence do not use language to measure intelligence. They make use of pictures, designs, objects, etc. Such tests may be (i) Performance tests, e.g., Koh’s Block Design Test or (ii) Paper-pencil test e.g., Raven’s Standard Progressive Matrices.

Application of Intelligence Testing

1. Effective Schooling – On the basis of intelligence test scores, teachers can classify students into intellectual categories and devise special instructional programmes suited to their mental development.
2. Aids Mental Health Personnel – Intelligence tests are helpful to Mental Health personnel such as psychologists, etc., for diagnosis purposes and therapy.
3. Effective Parenting – Parents can provide appropriate educational facilities to their children based on their IQ scores.
4. Career Counselling – Scores obtained on intelligence tests help the student to select the right educational options/ courses.
5. Vocational Counselling – Individuals can choose a suitable career and achieve job satisfaction when they make a realistic choice of vocation based on IQ scores.

Question 3.
Explain the characteristics of people having high social intelligence.
Answer:
E.L. Thorndike proposed the term Social Intelligence. Howard Gardner included ‘interpersonal intelligence’ in the Multiple Intelligences Theory. According to Karl Albrecht, “Social intelligence is the ability to get along well with others and to get them to cooperate with oneself’.

According to Karl Albrecht our behaviour towards others falls somewhere on a spectrum between toxic behaviour and nourishing behaviour. Devaluing others, refusing cooperation to others, negative talking, discouraging others, etc., are some of the examples of toxic behaviours. A continued pattern of toxic behaviour indicates a low level of social intelligence. Respecting others, cooperating with others, positive talking, encouraging others, etc., are some of the examples of nourishing behaviour. A continued pattern of nourishing behaviour indicates a high level of social intelligence.

The following are some of the characteristics of people having high social intelligence:

1. They are good at understanding and interacting with other people.
2. They have ability to monitor their verbal and non-verbal expressions while communicating with others.
3. They are good speakers and good listeners.
4. They are skilled at assessing the emotions, motivations, desires, and intentions of those around them.
5. They understand social dynamics in an effective way.
6. They are flexible in their approach while dealing with others.
7. They are goal orientated, persistent and self- confident.
8. They can resolve conflicts in social contexts.
9. They are successful negotiators.
10. They enhance personal and professional relationships with others.

Class 12 Psychology Chapter 2 Intelligence Intext Questions and Answers

ACTIVITY (Textbook Page. No. 12)

Activity 1
Read the following sentences and decide whether the given sentences are the facts or just beliefs about intelligence :
(i) Intelligence is something that is inborn.
(ii) Students who are intelligent can get good marks in examinations.
(iii) Students who do not get good marks in examinations are less intelligent.
(iv) People who are intelligent are very smart.
(v) Intelligent people can impress anyone by their talk.
Answer:
[All the statements are just beliefs, not facts.]

Activity 2 (Textbook Page. No. 15)
Read the following examples. Using the formula, calculate the I.Q. of the following students:
(i) Aabha is a genius girl. Her chronological age is 8 years and her mental age is 14 years. Find out her I.Q.
(ii) Mayur has learning disabilities. His chronological age is 8 years and his mental age is 6 years. Find out his I.Q.
Answer:
(i) In case of Aabha – Mental Age (MA) = 14 years
Chronological Age (CA) = 8 years, IQ = ?
IQ = \(\frac {MA}{CA}\) × 100 = \(\frac {14}{10}\) × 100 = 175
IQ = 175.

(ii) In case of Mayur – Mental Age (MA) = 6 years.
Chronological Age (CA) = 8 years, IQ = ?
MA 6
IQ = \(\frac {MA}{CA}\) × 100 = \(\frac {6}{10}\) × 100 = 75
IQ = 75.

Activity 3 (Textbook Page. No. 16)

Make a chart listing the advantages and disadvantages of individual tests of intelligence.
Answer:
(i) Advantages-

1. The test administrator can establish a rapport with the client.
2. The test administrator can get additional information about the client’s feelings, moods and expressions during testing.
3. Individual tests are more capable of measuring creative thinking, compared to group tests.

(ii) Disadvantages-

1. Individual tests are time consuming and costly to administer.
2. Individual tests require a trained and skillful examiner to administer, score and interpret them.
3. These tests cannot be used for mass testing.

Activity 4 (Textbook Page. No. 16)

Make a chart listing the advantages and disadvantages of group tests of intelligence.
Answer:
(i) Advantages-

1. Group tests are less time consuming and economical to administer.
2. In administrating group tests, the role of the examiner is minimal. So, he/she need not go through any specialized training.
3. These tests can be used in cases where mass testing is needed.

(ii) Disadvantages-

1. The test administrator has much less opportunity to establish rapport, obtain cooperation and maintain interest of the clients.
2. Compared to individual tests, group tests are less capable of measuring creative aspect of intelligence.

Activity 5 (Textbook Page. No. 17)

Verbal test of intelligence Choose the correct option:
(i) Shoe – Foot : : Hat – ……………..
(a) Kitten
(b) Head
(c) Knife
Answer:
Shoe – Foot: : Hat – Head

(ii) Eye – Head : : Window – ………………
(a) Key
(b) Floor
(c) Room
Answer:
Eye – Head : : Window – Room

Activity 6 (Textbook Page. No. 19)

Read the examples given in Activity 6 on textbook page no. 18 and decide the positions of Chetan, Sagar and Anil on the following spectrum of behaviour:

Answer:

Activity 7 (Textbook Page. No. 20)

Study the differences between the characteristics of people having high emotional intelligence and low emotional intelligence and think about what you can do to develop your emotional intelligence?

Characteristics of people having high emotional intelligence	Characteristics of people having low emotional intelligence
Emotionally stable, Patient	Emotionally unstable, Impatient
Optimistic, Independent	Pessimistic, Dependent
Happy, Enthusiastic	Sad, Apathetic
Calm, Satisfied	Restless, Dissatisfied

Answer:
I will try to develop emotional intelligence by adopting the following ways-

1. active listening skills .and effective style of communication.
2. practice self-evaluation and self-awareness.
3. respond instead of reacting in conflict situations.
4. stay motivated, rational and have a positive outlook.
5. show empathy, be approachable.
6. adopt effective stress management techniques.

Activity 8 (Textbook Page. No. 20)

Discuss how the following devices use Artificial Intelligence:
(i) Computers
(ii) Self-driving cars
(iii) Robots
(iv) Medical diagnostic tools
(v) Translation devices
(vi) Automatic Missiles
(vii) Chatbots, etc.
Answer:
(i) Computers – AI is the ability of a computer programme to think and learn. It makes computers smart, i.e., work without being encoded with commands.

(ii) Self-driving cars – Autonomous driving is a key application of AI. Self-driving cars are equipped with multiple sensors such as cameras, radars, etc., which generate massive amount of data and simulate human perceptual and decision making processes in driving.

(iii) Robots – AI gives robots the computer vision to navigate, sense and calculate their reaction accordingly. Robots learn to perform tasks from humans through machine learning which is a part of computer programming and AI.

(iv) Medical diagnostic tools – Abnormalities in body fluids and tissue can be automatically detected using AI in medical diagnosis solutions. AI can help to speed up process of diagnosis, i.e., biomarkers.

(v) Translation devices-AI uses Neural Machine Translation (NMT), i.e., an electronic, neural network trained to recognize patterns in the input data set and translate it into desired output data, for e.g., a sentence in Japanese into English. It is more accurate than simple machine translation.

(vi) Automatic Missiles – AI is leading the world towards a battlefield that has no boundaries, may not even have humans involved and will be impossible to control across the human ecosystem in Cyberspace, Geospace and Space (CGS). It refers to the weaponisation of AI, i.e., a weapon system that can select human/ non-human targets without further intervention by a human operator.

(vii) Chatbots – AI makes it possible for chatbots to ‘learn’ by discovering patterns in data. A chatbot is a computer programme that imitates spoken and written conversation, i.e., voice commands and texts, for e.g., Siri.

Balbharti Maharashtra State Board Class 12 Psychology Solutions Chapter 1 Psychology: A Scientific Discipline Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Psychology Solutions Chapter 1 Psychology: A Scientific Discipline

1. Choose the correct option and complete the following statements.

Question 1.
Till 1879, psychology was a branch of ……….
(a) physics
(b) philosophy
(c) physiology
Answer:
(b) philosophy

Question 2.
Psychology is a science.
(a) natural
(b) social
(c) biological
Answer:
(b) social

Question 3.
…………………. is considered as founder of Psychoanalysis.
(a) Wilhelm Wundt
(b) Carl Rogers
(c) Sigmund Freud
Answer:
(c) Sigmund Freud

2. Match the pair

Group A	Group B
(1) Structuralism	(a) John Watson
(2) Functionalism	(b) Carl Rogers
(3) Behaviourism	(c) Ulric Neisser
(4) Cognitivism	(d) William James
	(e) Wilhelm Wundt

Answer:

Group A	Group B
(1) Structuralism	(e) Wilhelm Wundt
(2) Functionalism	(d) William James
(3) Behaviourism	(a) John Watson
(4) Cognitivism	(c) Ulric Neisser

3. State whether the following statements are true or false.

Question 1.
Psychology is a study of mental processes.
Answer:
True

Question 2.
Case study method is quite often used by clinical psychologists.
Answer:
True

Question 3.
An experimenter is a person on whom the experiment is conducted.
Answer:
False

4. Answer the following in one sentence each.

Question 1.
In which year was the first psychology laboratory established?
Answer:
The first psychology laboratory was established in 1879 by Wilhelm Wundt, at the University of Leipzig in Germany.

Question 2.
Who is considered as the ‘Father of American Psychology’?
Answer:
William James, founder of Functionalism school of thought of psychology is considered ‘Father of American Psychology’.

Question 3.
What is meant by an experimenter?
Answer:
The person who conducts the experiment is called the experimenter.

5. Define / Explain the concepts in 25 – 30 words each.

Question 1.
Replicability
Answer:
Replicability is one of the key features of science. Scientific knowledge can be replicated under the same circumstances as the original experiment. This ensures reliability of results towards establishing a scientific theory.

Question 2.
Correlation coefficient.
Answer:
Correlation coefficient is the measurement of the correlation between two or more variables. Its value extends between -1.00 to +1.00. The concept was first introduced by Sir Francis Galton. The Pearson product-moment correlation coefficient is the most commonly used type of correlation coefficient.

6. Write short notes on the following in 50 – 60 words each.

Question 1.
Observation method
Answer:
Observation method is a research method that is employed in conditions where experiments may not be possible or even necessary. Observation is used by child psychologists and social psychologists. It may be carried out in a natural setting, for e.g., observing candidates waiting their turn for an interview. It may also be carried out in controlled conditions.
The following factors should be kept in mind while carrying out the observation

1. it should be done systematically.
2. a comprehensive list of behaviours to be observed must be prepared.
3. the persons should not be aware of being observed.

The disadvantages of observation are:

1. it is a time consuming method.
2. objectivity is difficult to maintain during observation.
3. it is difficult to establish cause-effect relationships.

Question 2.
Survey method
Answer:
A survey is a research method used to collect data from a pre-determined group of respondents, i.e., a sample. It is used to obtain information about the preferences, opinions, etc., of the ‘sample’ population. It makes use of tools like questionnaire, checklist, interviews, etc. Survey method is employed by social psychologists, industrial psychologists, etc. The researcher must ensure that-

1. sample of respondents is representative of the population.
2. questions should not be ambiguous.

The disadvantages of survey method are:

1. it is a very subjective method,
2. it lacks reliability.

Question 3.
Case study method
Answer:
Case study method is a qualitative research method employed by clinical psychologists. It provides intensive, descriptive information about an individual from multiple sources such as family, peers, school, academic and health records, etc. This helps to assess the person’s level of psychological and social functioning. Researchers may employ techniques like observation, interview, psychological tests, etc. Psychologist such as Sigmund Freud and Jean Piaget made extensive use of case study method. However, this method is very time consuming and subjective.

Question 4.
Importance of rationality
Answer:
Rationality implies being agreeable to reason. According to Stanovich, “Rationality involves adaptive reasoning, good judgement and good decision making.”
According to Dr. Albert Ellis, rationality helps a person to successfully attain goals and be happy. He proposed Rational Emotive Behavioural Therapy (REBT), which is a popular intervention method in counselling psychology.
Rationality is important because:

1. It allows us to make decisions in new or unfamiliar situations by helping us to gather and process relevant information.
2. It enables the person to exhibit tolerance and flexibility.
3. A rational person accepts oneself unconditionally and assumes responsibility for their own behaviour.
4. Rationality helps to understand and respect the views and interests of others.

7. Define / Explain the concepts in 25 – 30 words each.

Question 1.
Science
Answer:
The word science is derived from the Latin word ‘Scientia’ which means ‘knowledge’. Science is the pursuit and application of knowledge and understanding of the natural and social world, following a systematic methodology based on evidence. The key features of science are empirical evidence, objectivity, scientific causality, systematic exploration and replication.

Question 2.
Objectivity
Answer:
Objectivity is one of the key features of science. It refers to the ability to observe and accept facts as they exist setting aside all sources of expectations, values, prejudices, etc. Science objectively studies some particular phenomenon.

8. Answer the following questions in detail.

Question 1.
Explain the types of correlation.
Answer:
A correlation refers to a statistical tool used to measure the relationship between two or more variables.
If the change in one variable is accompanied by a change in the other variable, this interdependence is called correlation. It is measured by correlation coefficient which extends between -1.00 to + 1.00.
The types of correlation are:
(i) Positive correlation – Both variables either increase or decrease at the same time, for e.g., extent of rehearsal (revision)↑ and recall score↑.
The value of positive correlation from 0.00 to + 1.00. It is represented as: variable 1 variable 2

(ii) Negative correlation – An increase in one variable is associated with a decrease in the other and vice-versa. The value of the correlation is between 0.00 to -1.00, for e.g., bunking of lectures (↑) and score in exams (↓).

(iii) Zero correlation – A change in one variable leads to no significant change in the other variable, for e.g., height and intelligence.

Question 2.
Explain some of the challenges in establishing psychology as a science.
Answer:
Many criticisms of psychology as a science have been made on practical, philosophical and ethical grounds. The challenges in establishing psychology as a science are:
(i) It is in preparadigmatic state – According to American philosopher, Thomas Kuhn, psychology is still in a preparadigmatic state as it has not succeeded in producing a cumulative body of knowledge that has a clear conceptual cove.

(ii) Issues related to objectivity and validity – Methods used in psychology such as introspection, surveys and questionnaires are subjective. Due to this, psychology lacks two criteria of science, i.e., objectivity and validity.

(iii) Issues related to predictability and replicability – In psychology it is difficult to make exact predictions as people respond differently in different situations. Test result are more varied and hence difficult to replicate.

(iv) Objectifying humans – According to some psychologists, subjecting human behaviour to experimentation amounts to objectifying individuals.

Question 3.
Explain the key features of science.
Answer:
The word science is derived from the Latin word ‘Scientia’ which means ‘knowledge’. Science is the pursuit and application of knowledge and understanding of the natural and social world, following a systematic methodology based on evidence.
They key features of science are:

1. Empirical evidence – It refers to acquiring information through direct observation or experiments. Scientific knowledge is based on verifiable evidence.
2. Objectivity – This refers to the ability to observe and accept facts as they exist, setting aside all sources of expectations, values, prejudices, etc.
3. Scientific causality – Science aims to establish a cause-effect relationship between the variables under consideration, i.e., the effect of the Independent Variable on the Dependent Variable.
4. Systematic exploration – Science adopts a sequential procedure for studying various phenomena. It includes scientific steps like formulating a hypothesis, collection of facts, scientific generalisation etc.
5. Replication – Scientific knowledge can be replicated under the same circumstances as the original experiment. This ensures reliability of results towards establishing a scientific theory.
6. Predictability – Science involves describing and explaining phenomena as well as to make predictions accordingly.

Question 4.
Write detailed information of the experimental method in psychology.
Answer:
The systematic observation about a certain problem under controlled laboratory conditions is called an experiment.
For example, Albert Bandura conducted experiment to investigate if social behaviours i.e., aggression can be acquired by observation and imitation. The steps involved in an experiment are:

1. identifying the problem
2. formulation a hypothesis
3. selecting an experimental design
4. conducting the experiment and data collection
5. data analysis
6. drawing conclusions

The key terms of experimental method with examples are:

1. Problem: To study the effect of music on the level of blood Pressure.
2. Hypothesis: The music will help in regulating the level of blood pressure.
3. Independent variable: Music.
4. Dependent variable: Level of blood pressure.
5. Intervening variables: Age, gender, all other sounds other than music, etc.
6. Experimenter : A person who will be conducting this experiment. (May be you or your psychology teacher.)
7. Participant : A person on whom this experiment will be conducted. (May be your family member/ friend.)

The two variables in an experiment are:

1. Independent Variable (I.V.) – It is the variable that the experimenter manipulates or changes systematically to study it’s effect on the D.V. (Cause).
2. Dependent Variable (D.V.) – the variable that may change due to manipulation of the I.V. (effect).

The features of the method are:

1. it is the most objective and scientific method of studying behaviour
2. it helps to establish cause-effect relationship between two or more variables
3. the findings of an experiment are verifiable

The limitations of the method are:

1. it may not be possible to control all intervening variables
2. it has a limited scope, i.e., there may be ethical constraints or risk factors
3. experimenter’s expectations or participant attitude may influence the conclusions

Question 5.
Explain the characteristics of a rational individual.
Answer:
One of the significant aims of individuals is attainment of happiness. However, in the pursuit of happiness, one should not be driven by irrational influences or compromise on social norms and ethics. Psychology helps to improving life quality by applying the concept of rationality in daily life. According to Stanovich, “Rationality involves adaptive reasoning, good judgement and good decision making.”
According to Dr. Albert Ellis, rationality helps a person to successfully attain goals and be happy. He proposed Rational Emotive Behavioural Therapy (REBT), which is a popular intervention method in counselling Psychology.

According to Ellis, rational people possess characteristics such as:

1. Understanding both self-interest and social interest – Rational people understand what choices help them to grow and take responsibility for their actions. They are also careful not to violate other’s rights.
2. Self-direction – The person does not demand excessive attention or support from others as he/she assumes the responsibility for his/her own life.
3. Tolerance – It is the willingness to accept beliefs and behaviour patterns of others that may differ from our own way of thinking.
4. Flexibility – Rational people tend to be flexible and unbiased in their thoughts and actions.
5. Self-acceptance and self-responsibility – A rational person accepts him/herself unconditionally as well as responsibility for his/her thoughts, emotions and behaviour.

The concept of rationality can be explained as:

B (Balance)	Balance between self-interest and interest of others
E (Estimate)	Estimate the time, efforts, gains and losses
R (Respect)	Respect oneself and others
A (Affiliate)	Affiliate with others
T (Tolerate)	Tolerate oneself and others
I (Intergrate)	Integrate personal wellbeing with social wellbeing
0 (Optimize)	Optimize potential fully
N (Navigate)	Navigate path of success
A (Accept)	Accept the limitations and overcome them
L (Live)	Live life fully

How Rational Am I?

Question 1.
Identify the strongest and the weakest characteristics in you from those explained by Dr. Albert Ellis.
Answer:
Rational people are psychologically healthy and show adaptive reasoning and good decision making.
According to Dr. Albert Ellis, some characteristics of rational persons are:

1. Understanding self-interest and social interest
2. Self-direction
3. Tolerance
4. Flexibility
5. Self-acceptance and self-responsibility.

The strongest characteristic in me is self-direction. The weakest characteristic in me is flexibility.

Question 2.
How will you work on your weakest characteristic? Write two strategies.
Answer:
Two strategies that I can use to improve the flexibility in my life is:

1. Adopt an unbiased perspective and non-judgmental thinking
2. Practicing meditation and mindfulness.

(A) Identify the Independent Variable and Dependent Variable.

1. To study the effect of colour on moods.
2. To study the effect of positive feedback on self-confidence.
3. To study the effect of loud noise on concentration levels.
4. To study the effect of exposure to classical music on reading skills.
5. To study the effect of a type of diet on weight loss.
6. To study the effect of a fertilizer on crop growth.
7. To study the effect of solving previous years exam papers on scores in the exam.
8. To study the effect of worker’s participation in decision making on job satisfaction.

Answer:

Independent Variable	Dependent Variable
1. Colour	Moods
2. Positive feedback	Self confidence
3. Loud noise	Concentration levels
4. Classical music	Reading skills
5. Type of diet	Weight loss
6. Fertilizer	Crop Growth
7. Previous year question papers	Scores in the exam
8. Workers participation in decision making	Job satisfaction

(B) Identify the type of correlation.

1. Gender and Intelligence.
2. Cold weather and sales of air conditioners.
3. Low income and standard of living.
4. Consuming foods with antioxidants and immune system.
5. Speed and time taken to cover a distance.
6. Heads/tails,on flipping a coin and result when you flip another time.
7. Colour of the hair and learning a dance form.
8. Average temperature in a city and ice cream sales in it.
9. Chain smoking and lifespan.
10. Intelligence and language development.
11. Increasing age after 60 years and physical agility.
12. Level of water in a fish tank and area of fish habitat.
13. Large number of trees felled and probability of soil erosion.
14.  More hours spent at work and available leisure time.

Answer:

Positive Correlation	3, 4, 8, 10, 12, 13.
Negative Correlation	2, 5, 9, 11, 14.
Zero Correlation	1, 6, 7.

Class 12 Psychology Chapter 1 Psychology: A Scientific Discipline Intext Questions and Answers

ACTIVITIES (Textbook Page. No. 1)

Activity 1

Read the following statements. Think and discuss whether the given statements are facts or myths and misconceptions about psychology:
(i) Psychology is just common sense and not a real science.
(ii) Psychology is simply a pseudoscience.
(iii) Psychologists are simply mind readers or the face readers.
(iv) Psychology is related only to the study of crazy people who are in need of therapy.
(v) Psychologists, psychiatrists and counsellors have the same professional qualifications and their jobs are almost of the same nature.
(vi) Anyone with a degree in psychology can provide counselling to a need person. Answer:
Answer:
All the statements are misconceptions.
Statement 1, 2 are misconceptions because Psychology is a social science that fulfils the criteria of a science, e.g., it employs the scientific method.

Statement 3 is a misconception. Psychologists are trained professionals in some field of psychology, e.g., counselling psychology. They employ tools like observation, case study, experiments, etc.

Statement 4 is a misconception. There are numerous branches of psychology such as Social Psychology, Developmental Psychology, Abnormal Psychology, Environmental Psychology, etc.

Statement 5 is a misconception. Psychiatrists are trained medical doctors and focus on medication management. Psychologists employ psychotherapy such as CBT, REBT, etc.

Statement 6 is a misconception. A counsellor is a person who has academic qualifications as well as professional training in counselling techniques.

Activity 2 (Textbook Page. No. 3)

Read the following statements and discuss about the same in the classroom:
(i) Psychology is a science because it fulfils many conditions of science.
(ii) Psychology is not an exact science like physics or chemistry.
(iii) Psychology is a social science that studies human (and animal) behaviour and mental processes.
(iv) Psychology uses some objective research methods, it examines cause-and-effect relationships to produce laws governing human behaviour and its findings can be verified.
(v) Psychology can be distinguished from pseudoscience and folk wisdom as psychology has evidence against its theories.
(vi) The subject matter of psychology is complex as human behaviour is dynamic and the mental processes are abstract. Therefore, the theories of psychology are not as universal, exact and precise as those in physics and chemistry.
Answer:

1. Psychology fulfils conditions of science such as acquiring empirical evidence, objectivity, predictability, scientific causality, etc.
2. Psychology is a social science which deals with human beings. It is not a physical science.
3. Psychology is defined as the scientific study of human behaviour and mental processes.
4. Psychology uses objective methods like controlled laboratory experiments and aims to establish scientific causality and verifiable theories.
5. Psychology is not based on folk wisdom, pseudo knowledge or myths. It is based on systematic exploration and acquisition of empirical evidence.
6. Psychology is a social science so its theories cannot be universal or exact as in the physical science. Human behaviour is constantly evolving and unpredictable.

Activity 3 (Textbook Page. No. 4)

Visit the website given below and collect information about various schools of thought of psychology: https://www. verywellmind.com/psychology-schools-of-thought-2795247
Answer:

1. Structuralism – Focused on breaking down mental processes into the basic elements using techniques like introspection.
2. Functionalism – Focused on the mind’s functions and adaptations.
3. Gestalt school – Focused on looking at the ‘whole’ rather than individual elements.
4. Behavioural school – Focused on study of observable behaviour.
5. Psychoanalytic school – Emphasized the influence of the ‘unconscious’ on behaviour.
6. Humanistic school – It developed as a response to psychoanalysis and behaviourism. It focused on individual free will, personal growth and concept of self-actualization (achieving one’s full potential).
7. Cognitive school (Cognitivism) – Focused on the study of mental processes like learning, perception, memory etc.

In recent times, Behavioural school, Cognitive school and Humanistic school remain influential. Most psychologists adopt an eclectic approach drawing upon different perspectives.

Activity 5 (Textbook Page. No. 5)

Find out the Independent Variable and Dependent Variable from the experiment ideas given below:
(i) To study the effect of practice on memory.
(ii) To study the effect of mental set on problem solving.
(iii) To study the effect of noise pollution on the speed of writing.
(iv) To study the effect of colour on perception.
(v) To study the effect of feedback on decision making.
Answer:

Independent Variable	Dependent Variable
(1) Practice	Efficient memory
(2) Mental set	Problem solving
(3) Noise pollution	Speed of writing
(4) Colour	Perception
(5) Feedback	Efficient decision making

Activity 6 (Textbook Page. No. 8)

Discuss about the following topics that can be studied using correlation study method:
(i) Bunking lectures and score in exams
(ii) Weight and intelligence
(iii) Amount of salary and level of job satisfaction
(iv) Rehearsal and forgetting
(v) Height and aptitude in music
(vi) Urbanization and pollution
(vii) Speed of vehicles and road accidents
Answer:
(a) Positive correlation

1. Urbanization and pollution
2. Speed of vehicles and road accidents

(b) Negative correlation

1. Bunking lectures and scores in exams
2. Rehearsal and forgetting

(c) Zero correlation

1. Weight and intelligence
2. Height and aptitude in music

Balbharti Maharashtra State Board Class 12 Sociology Solutions Passages Answers.

Maharashtra State Board Class 12 Sociology Passages Answers

Passage 1
Read the passages and answer the questions given below.

This is a real-life story of Rukmini Devi who lives in a small hut in Gaigotha Village in Wada Taluka of Palghar District in Maharashtra State. She belongs to the Warli tribe. Her husband is a marginal farmer who cultivates on two acres of land. They have two children, one daughter aged 10 years and an I son aged 6 years. Both the children walk to school and back daily (located about 3 miles away).

When cultivation season is over, (or if the rice crop is damaged due to heavy rains or pests) they face many hardships. A section of the crop is kept for their personal use, for the year. Tur Dal (lentil) is also grown in one small area, again for personal use. Ina small backyard, they grow vegetables like chilies, cucumber, and bitter gourd (karela).

During the off-season, both husband and wife go to the brick kilns (about 7 miles away) to do piece-rate work (That is, they get paid for each brick that they make.) While the men earn Rs. 300 per day, the women earn Rs. 150-200. Rukmini Devi stated that they prefer to walk the 7 miles both ways because the bus fare is Rs. 35/- per head one way. They cannot afford it.

Question 1.
Identify any three problems that the family of Rukmini Devi has to face.
Answer:
The main problem of the family of Rukmini Devi is poverty. The productivity of their economic activities is very less as they cannot use modern production techniques like fertilizers, pesticides, etc., their agriculture depends upon monsoons and there is a lack of adequate irrigation facilities. Due to the seasonal nature of agriculture, they have to face hardships and exploitation by non-tribal people. They are also being exploited by their employers who take maximum work from them and pay them minimum wages.

Question 2.
Point out and discuss briefly, gender discrimination in this setting.
Answer:
We find Rukmini Devi facing wage discrimination i.e., discrimination on the basis of sex in the payment of wages, where Rukmini Devi and her husband perform work of similar skill, effort, and responsibility for the same employer under similar working conditions but they don’t earn the same amount of money. This implies discriminative employers save on the cost by employing the tribal females. Rukmini Devi is working in, informal labour market where there is an absence of policies to safeguard gender rights.

Question 3.
Discuss the nature of the economy of the Warli tribes.
Answer:
The economy practiced by Warli Tribe is subsistence economy and simple. They use out model techniques therefore their production is insufficient. They cannot fulfill their basic needs. They try to fulfill their needs by collective efforts. Thus, the simple and collective economic life is an important characteristic of the tribal economy. The main occupation of the Warli tribe is agriculture which is in a state of backwardness. They live below the poverty line.

Passage 2
Read the passages and answer the questions given below.

Education, since the coming of the British to India, has been secular in content. By this we mean, the content of education did not include the study of sacred texts. Schools were open for all – to learn and climb the ladder of vertical mobility. The study of the English language, as well as the opportunity to study in the English medium, was available.

It is true that several Indians from certain social and economic strata were the first to access an English education. Many of them later constituted the intelligentsia of our society. We refer to many of them as social reformers, such as Raja Rammohan Roy, Ishwar Chandra Vidyasagar, Pandita Ramabai, Maharshi Dhondo Keshav Karve. They worked for religious, social, and educational reform in Indian society.

Such visionaries of society continue even in the post-Independence era, to the present time.

Educational opportunities have grown by leaps and bounds in the last 73 years since Independence. One questions if the educated have merely acquired education or if the education has helped citizens become gainfully employed and more importantly, enlightened enough to transform society at the micro-level.

It is necessary for the government to consider the interests of all sections of society.

Each citizen can play a dynamic role in the development of all people in our society.

Question 1.
Explain the impact of the introduction of a new education system by the British on Indian society.
Answer:
According to the new liberal education policy introduced by the British, education was not restricted to special sections of society. The spread of secular-based education widened the minds of the people living in India. Well-educated Indians were influenced by western values. They recognized that various customs and traditions were unjust and unfair. Therefore, they started various religious and social movements to reform Indian society.

Question 2.
Explain the role of education in the transformation of society at the micro-level.
Answer:
The role of education is effective to bring change at the individual level i.e., micro-level. The role of education as an agent or instrument of social change and social development is widely recognized today. Education can initiate social changes by bringing about a change in the outlook and attitude of man. It can bring about a change in the pattern of social relationships and thereby it may cause social changes Education has brought about phenomenal changes in every aspect of men’s life. Education is a process that brings about changes in the behaviour of society. It is a process that enables every individual to effectively participate in the activities of society and to make a positive contribution to the progress of society.

Question 3.
Discuss education as an instrument of social change.
Answer:
Education changes the outlook and traditional approach towards social and economic problems. It sharpens the skills, and knowledge of the children. Technical education helps in the process of industrialization which helps to bring a vast change in society. Education not only preserves the cultural traditions of the society but helps to transmit them from one generation to the next. Education fulfills needs of the society and propagates ideas to promote social change in all fields of life.

Passage 3
Read the passages and answer the questions given below.

Indian society is a melting pot of cultures. The history of Indian society gives enough evidence of the process of accommodation. From early times migrants integrated into Indian society and influenced its culture. Our historical past is testimony to this fact of cultural diffusion.

Today, we describe our society as a composite whole that includes tribal, rural, and urban communities. The way of life in these segments have their unique characteristics. However, is it also an observation that no one segment or community can be seen in its “pure” state. On the one hand, there is interdependence between communities and on the other, this would imply a certain extent of loss of cultural elements such as language, beliefs, customary practices, etc. Have we not seen how, for example, Warli or Madhubani Art has made it to T-shirts and wall hangings in many urban households? Also, how technology has reached the remotest corners of our country?

A question that may cross your mind may be, ‘Is there anything such as ‘pure culture? What constitutes “Indian culture”? ‘Can cultural extremism be valuable in the present world? These questions are valid
as they set us thinking. Perhaps there is no single “answer”?

Question 1.
What constitutes “Indian culture”, discuss with respect to cultural diffusion in Indian society.
Answer:
Over the years, India has changed a lot in terms of living standards and lifestyles, but even then the values and traditions are still intact and remain unchanged. Another aspect of India’s culture can be seen when someone is facing deep trouble. Irrespective of the class, tribe, or religion, everyone will step forward to provide help and support. Culture in India is a dimension that has been composed by its long history and its unique way of accepting customs and traditions, right since the Indus valley civilization took birth. India is a melting pot of various religions and cultures and it is the very nature of the unity in diversity, which has largely shaped the growth of Indian culture as a whole. The property of togetherness among people of various cultures and traditions has made India, a unique country.

Question 2.
Discuss tribal art and its role in cultural identity.
Answer:
Tribal art has progressed considerably due to the constant developmental efforts of the Indian government and other organizations. Tribal art generally reflects the creative energy found in the tribal areas. Tribal art ranges through a wide range of art forms, such as wall paintings, tribal dances, tribal music, and so on. Folk art in India apparently has great potential in the international market because of its traditional aesthetic sensibility. Some of the most famous folk paintings of India are the Madhubani paintings of Bihar, Warli folk paintings of Maharashtra

Question 3.
How interdependence between communities has resulted to a certain extent loss of cultural elements?
Answer:
Though the interdependence of communities connects all the cultures of the country it has also weakened cultural bonds of tribal and rural communities and also lead to the loss of cultural identity. It also makes one forget their own values, customs, and traditions. Although it has played an immense role in the unification of our country, a great amount of cultural identity and traditional values have also been lost.

Passage 4
Read the passages and answer the questions given below.

The causes of disharmony and strife are several-fold. Resistance to social change is one among many. Problems of contemporary Indian society include domestic violence, sexual abuse, child rights, problems of senior citizens, migrants, ethnocentrism, religious fundamentalism, linguistic fanaticism, environmental degradation, substance abuse and addiction to devices, mob lynching, and so on.

Given the varied types of social problems and their changing nature, there emerges a need to examine them in a scientific manner. The applicability of Sociology in its widest sense includes the exploration of various themes that cut across fields such as Masculinity Studies, Minority Studies, Film and Media Studies, Sociology of Sports, Environmental Sociology, Forensic Sociology, Gerontology, Sociology of Music, Medical Sociology, Marketing Sociology and so on.

Various government departments and voluntary organizations include sociologists on their panels to help steer policies and programmes. As Sociology is a people-centered discipline, it tends to create awareness and dialogue regarding human relationships. This is a valuable asset in governance and conflict resolution.

Question 1.
How does sociology perceive social problems in a scientific manner?
Answer:
Sociology views social problems as problems which arise out of the functioning of systems and structures in a society, or which are the result of group influences. They are also concerned with social relationships which emerge and are sustained because of the social problems. Thus, in analyzing alcoholism, a sociologist will be concerned with its effects on social relations and roles, that is, the relations with family members, with colleagues in the office, and with neighbours and friends as well as its effect on work efficiency, status, and so on. The study of social problems in sociology aspires toward a body of valid and logically related principles to get solutions for the social problems.

Question 2.
Discuss how resistance to social change leads to disharmony in society.
Answer:
Certain resistance to change is there everywhere. In no society, all the changes are welcomed by the people without questioning and resistance. To some extent, the removal of evil practices such as child marriage, human sacrifice, animal sacrifice, untouchability, taboos on inter-caste marriages, etc., could be achieved after a long struggle in India. Due to ignorance people often oppose new changes. Habit is another obstacle to social change. Individuals are very much influenced by habits and customs. People dislike or fear the unfamiliar. They are not ready to give up a practice to which they have been habituated and adopt a new one. Hence, the new practice is looked down upon or rejected which leads to social harmony.

Passage 5
Read the passages and answer the questions given below.

Given below is a make-believe scenario.
Yogini and Yogita are twins of the Patkar family who live in a small room measuring 225 sq. ft. in a
small town. Yogini is brilliant in studies and Kabbadi. Yogita is an outstanding cricketer who represents the Western India region; she also was a topper in the State-level Marathi language Competition.

Their parents come from a small village in Marathwada; they were farmers. For the sake of their daughters, they shifted to a small town to facilitate their children’s further education and sports training.

Their relatives and others in their village have heard of the Patkar girl’s success and are also encouraged to send their children to big cities with the hope that they too will become successful and famous one day.

Today, if one visits the village you will notice that in many homes, there are only the elderly folk. The youth seem to have migrated to better their prospects. Can you imagine the effect of such migration on the local village community?

Question 1.
What are the challenges faced by rural people while sending their children for higher education?
Answer:
Rural people migrate to cities for a better standard of living and better future prospects. They face lot of hardships, face all sorts of exploitations for survival and to shape the lives of their children. They work hard to meet the needs of their children and try to give them better education so that they have a decent life. Patkar’s family come from a small village in Marathwada, live in a small. For the sake of their daughters, they shifted to a small town to facilitate their children’s further education and sports training.

Question 2.
What makes rural people migrate to cities?
Answer:
Rural people are plagued with various problems of agriculture, the ownership of land, lack of cottage industries, lack of educational facilities like schools and colleges, lack of health care centers, unemployment, traditionalism, and conservatism all these factors force rural people to migrate to cities. Cites attract rural people with better job opportunities, education, and a better lifestyle. Cities are centers of opportunities for the rural people so they migrate in hope of having a better standard of livings.

Question 3.
What are the effects of migration on rural communities?
Answer:
When rural people migrate to urban areas for better prospects leaving behind everything. The negative impact of migration on rural communities are there is labour shortage in farms, only senior citizens, women and children are left behind, increase in child labour, children’s are forced, to work in fields, increased workload for women’s decreased population, disorganization of family, customs and in this way rural culture slowly fades away.

Passage 6
Read the passages and answer the questions given below.

Social movements arise generally from needs felt by one or more members of any given society. Through social interactions, these needs and concerns are communicated to many more persons. A network of people who share these concerns becomes the driving force for change in that particular society. Movements are usually guided by some underlying philosophies and goals. Indeed, several movements are associated with a founder or a core group. It can take several years, or even decades for a social movement to become very wide and expansive, across vast geographical territories.

Social movements such as the Social Reform Movement, Trade Union Movement, Tribal Movement, Dalit Movement, Women’s Movement, Chipko Movement, LGBT Movement, Civil Rights Movement, Rationalist Movement and so many more have emerged and grown.

As a social movement gains momentum, greater awareness is created in society. In fact, the study of several movements has found its way into the academic curriculum as well as research. For example, courses on Labour Studies, Gender Studies, minority’ Studies, and Environmental Studies. Social movements can stimulate critical thinking about social issues in the wider society of which we are apart. Some of these concerns lead to the passing of legislation. Every era or generation has its share of concerns from which may emerge new social movements.

Question 1.
What do you understand by social movement and discuss how it functions?
Answer:
Social Movement is a collection of a large group of people, who come with the desired objective to create a change or resist change. Through social interactions, individuals communicate and show their concern on various issues where they feel it necessary to change. Social movements arise generally from needs felt by one or more members of any given society. A network of people who share these concerns becomes the driving force for change in that particular society. Movements are usually guided by some underlying philosophies and goals. Indeed, several movements are associated with a founder. It can take several years, or even decades for a social movement to become very wide and expansive, across vast geographical territories.

Question 2.
How does the social movement arise in Society?
Answer:
Social movements arise in the society when certain issues bring unrest and discontent like unwanted social order and outdated norms like early child marriage, women emancipation, human rights, LGBT rights, etc., in the society. At this junction groups of people organize themselves, raise their voices and feelings and opinions set to influence the opinion and emotions of others, and prepare for reform. The need of society to bring changes in the existing system leads to a social movement.

Question 3.
Discuss any three social movements in the given passage.
Answer:
The three types of social movements are Social Reform Movements, Trade Union Movement, and Chipko Movement.
The social Reform Movement started in the 19th century. The movement promoted to change the traditional and conservative Indian society. Issues of main concern were religion, untouchability, early child marriage, sati, widowhood, exploitation of poor, etc. With the help of various social reformers and British legislative systems, changes took place.

Trade Union Movement was organized to fight against the exploitation of workers like they worked for long hours and were paid less, poor working conditions, lack of promotions, management disputes, strikes, etc.

Chipko movement took place in Uttarakhand, where Sunderlal Bahuguna and villagers came together and hugged the trees protected them from being chopped by the contractors. This was a protest to save forests and preserve the environment. The government set up a committee to look into the matter eventually ruled in favour of the villagers.

Question 4.
In what ways do you think the social movement is beneficial for society?
Answer:
Through social movements, various issues have been raised, which has brought changes. It has changed the mindset, attitudes and, behaviour patterns for instance women’s education, acceptance of transgender, etc. As a social movement gains momentum, greater awareness is created in society. The study of several movements has found its way into the academic curriculum as well as research.

For example, courses on Labour Studies, Gender Studies, minority’ Studies, and Environmental Studies. Social movements can stimulate critical thinking about social issues in the wider society of which we are apart. Some of these concerns lead to the passing of legislation like the untouchability removal act 1955, the sati act of 1829, the marriage act of 1954, the factory act of 1948, the child labour act 1986, and many more to go.

Passage 7
Read the passages and answer the questions given below.

Can human societies be flawless? What is considered acceptable, desirable, valuable varies from time to time, place to place, and in different contexts.

There is sometimes a tendency to encourage excessive ethnocentric attitudes about one’s culture or group to which one belongs. Ethnocentrism in its extreme form is an obstacle to social harmony. For the sake of social solidarity, respect of other cultures, self-criticism, critical appraisal, reflection, and introspection is necessary. This may help to develop a pluralist way of appreciating the diversities within which we live. The life stories of people are a useful means to understand underlying feelings, beliefs, threats, and so on.

Civil society can play a part in this process to eliminate or minimize factors that hinder progress, or those which divide us.

Question 1.
Explain the term Ethnocentrism. How it is an obstacle to social harmony?
Answer:
Ethnocentrism makes one feel that one’s own culture and way of life are superior to all others. Ethnocentrism can lead to a biased understanding of other cultures. The ethnocentric group feels their culture is superior, this creates a negative outlook which can lead to arrogance and hatred for others. Ethnocentrism in its extreme form is an obstacle to social harmony as there is sometimes a tendency to encourage excessive ethnocentric attitudes about one’s culture or group to which one belongs leading to antagonism and hatred among various religions and cultures.

Question 2.
What can one do to bring social solidarity to society?
Answer:
The term social solidarity means various social groups bind together as one in society.

We need to throw away prejudices, self-interest, self-criticism, learn to respect other’s cultures, reducing inequality and injustice in society. Solidarity can be cultivated through education. Promote new policies or initiatives to eradicate poverty, volunteering and practicing in charity events, donating money, food, clothes, etc. This brings empathy towards others encourages people to bring equality, justice, and peace.

For the sake of social solidarity, respect for other cultures, self-criticism, critical appraisal, reflection, and introspection is necessary. This may help to develop a pluralist way of appreciating the diversities within which we live. The life stories of people are a useful means to understand underlying feelings, beliefs, and threats, and so on.

Question 3.
What are the divisive forces that hinder the progress of Indian society?
Answer:
India is a secular, multilingual, and multicultural country. These diversities become at times challenges that hinder the progress of society. Various divisive forces like regional disputes, language problems, discrimination on the basis of caste, communal conflicts, terrorism, unequal distribution of wealth, poverty, etc. This divisive force obstructs progress and disturbs the peace and harmony in society.

Passage 8
Read the passages and answer the questions given below.

All of you have been studying Sociology for over a year. Sociology is the scientific study of human social behaviour. However, it is not the only discipline that studies human behaviour. The study of human behaviour is of interest to historians, psychologists, sociologists, economists, political scientists, etc. Surely, this question may have crossed your mind, or your family or friends might have asked you – ‘What is the use of studying Sociology? What work will you do with a degree in Sociology? Perhaps you too have wondered about the same.

As a start, you could surely consider a career in teaching. However, you must be prepared to read extensively, be creative and develop a learner-centric personality. Indeed, you would have to be passionate about teaching and interacting with learners. For some, a career in research is another possibility, though that route is a long journey to attain the status of ‘sociologist’. Many sociology students and others too, choose to offer Sociology as their subject of special study for Civil Service Examinations like UPSC (Central Services) and MPSC (in Maharashtra). To clear these highly ‘ competitive examinations, it is necessary to read widely and be well aware of the totality of Indian society – its past, present; goals, and plans for the future.

Then, of course, there are many allied occupations where a degree in Sociology can provide insights that are useful to take on other people-oriented professions such as Policy and Programme Development, Social Work with specialization in Family and Child Welfare, Community Development, Medical and Psychiatric Social Work, School Social Work, etc.

The fact remains: it is not merely an obtaining degree in sociology that matters today, but the skill sets, sensitivity, and personality that you develop; your ability to modify and adapt to new needs and challenging situations of even daily living. Also, your ability to have a humanistic perspective whether dealing with research or creating empowerment programmes, or programmes for social change.

Question 1.
What is the scope of sociology?
Answer:
Sociology is the scientific study of human social behaviour. The scope of sociology is wide they are: It studies social relationships, social institution patterns of human behaviour in society. Sociology deals with social changes, development, and analysis of various social problems like poverty, crime, suicide. Gender inequality population etc., and suggest various measures to solve them. One can surely consider a career in teaching; however, one must be passionate about teaching and interacting with learners.

A career in research is another possibility, one may choose to offer Sociology as their subject of special study for Civil Service Examinations like UPSC (Central Services) and MPSC (in Maharashtra). There are many allied occupations where a degree in Sociology can provide insights that are useful to take on other people-oriented professions such as Policy and Programme Development, Social Work with specialization in Family and Child Welfare, Community Development, Medical and Psychiatric Social Work, School Social work, etc.

Question 2.
Discuss the uses of Sociology in present society?
Answer:
In today’s changing world the importance of sociology is growing day by day.
It makes a scientific study of society detects and solves various social problems.
Helps in planning and development. The knowledge of sociology, its application is increasing in the field of industry, social work, law, competitive examinations like UPSC and MPSC, management studies public relations, journalism, etc.
Present time sociology has become useful in framing policies and programme for development like family and child welfare schemes, community development, etc.

Question 3.
Discuss how studying Sociology is beyond obtaining a degree.
Answer:
Today, it is not merely obtaining a degree in sociology that matters, but the skill sets, sensitivity, and personality that you develop; your ability to modify and adapt to new needs and challenging situations of even daily living. Also, your ability to have a humanistic perspective whether dealing with research or creating empowerment programmes or programmes for social change plays an important role.

Passage 9
Read the passages and answer the questions given below.

Read the make-believe speech made by a representative of the Governing Body to its Executive Committee meeting, in a well-known international firm located in Pune.

“Good morning. The Board of Directors has asked me to communicate with you all a policy decision that has been taken by the higher management. Two policies have been taken by our company. One, there shall be a confidential, two-way appraisal of all employees from the coming financial year. Every employee will be assessed by one’s immediate senior, one’s team members, and by oneself through self-appraisal. Juniors will also assess the seniors to whom they report. There are specific criteria on which assessment will take place. A second policy decision is for the company to make every effort to Go Green’s keeping with the international commitment towards a cleaner and greener environment. You may please share this decision with members of your respective departments today, through our e-portal systems. Feedback from all employees is welcome but they must be made within a week from today to the Human Resource Department, via the e-portal. ”

Question 1.
Explain the 1st policy decision that has been taken by the higher management.
Answer:
Two policies have been taken by the higher management. One, there shall be a confidential, two-way appraisal of all employees from the coming financial year. Every employee will be assessed by one’s immediate senior, one’s team members, and by oneself through self-appraisal. Juniors will also assess the seniors to whom they report. There are specific criteria on which assessment will take place.

Question 2.
Discuss the action to be taken by the employee with respect to ‘Go Green’.
Answer:
A second policy decision is for the company to make every effort to ‘Go Green’ in keeping with the international commitment towards a cleaner and greener environment which they can share with members of their respective departments, through the company’s e-portal systems.

Question 3.
Explain the advantages of appraisal.
Answer:
It is said that performance appraisal is an investment for the company. Performance appraisal helps the supervisors to chalk out the promotion programmes for efficient employees.

Passage 10
Read the passages and answer the questions given below.

Indian films have a history of their emergence, growth, and development. There were the days of silent films where viewers interpreted visuals on screen and constructed their own understanding of what the films may have tried to communicate. Then came the days of audio-visual films, black and white films, and later, colour films.

People who can afford to watch films at theatres and those who can do so on their television screens at home are entertained by the stories that films tell us. There are all kinds of ideas, ideologies, tragedies, themes, and values that films communicate. Today one can watch films on the internet on one’s mobile phone. Sometimes the explicit and implicit messages are received by viewers, but they can also be lost on them.

Besides actors’ abilities to ‘play varied roles or characters, there are a whole lot of persons involved with the production process as well as its marketing. This may include the film director, screenplay writers, designers, sound engineers, make-up artists and stylists, casting experts, musicians and so on.

Fields like Visual Sociology, Sociology of Mass Communication, and Marketing Sociology have a role to play in the study of these varied dimensions. Films as a source of knowledge play multiple roles even today. The storylines and types of films are ever-increasing. Films are not limited to nor bound by standard themes, love stories, or gender stereotyping. Films can cause much upheaval on the one hand and generate much interest on the other. Regional films and international films have been added to the list of viewing possibilities and multiple interests.

Question 1.
Write an account of the popularity of Indian cinema.
Answer:
Indian cinema was always enjoyed, whether it was the days of silent films where viewers interpreted visuals on screen and constructed their own understanding of what the films may have tried to communicate. Then came the days of audio-visual films, black and white films, and later, colour films. People entertained themselves by the stories that films conveyed either by watching films at theatres or on their television screens at home. The Hindi language film industry of Mumbai also known as Bollywood, it is the largest and most popular branch of Indian cinema. Hindi cinema initially explored issues of caste and culture in films such as Achhut Kanya (1936) and Sujata (1959). The audience’s reaction towards Hindi cinema is distinctive with involvement in the films by the audience’s clapping, singing, reciting familiar dialogue with the actors.

Question 2.
What do you understand by explicit and implicit messages of films?
Answer:
The film’s main message is loud and clear through the majority of films is known as an explicit message. It also has underlying morals for its audience known as implicit messages which are not so obvious. For example, morals such as, it’s not what’s on the outside, it’s on the inside that counts.

Question 3.
Discuss types of movie genres.
Answer:
Movies consist of many genres and categories like drama, comedy, action, thriller, horror, romance, experimental, documentaries, etc. The producers, directors try to create new genres experimenting with their creativity. The storylines and types of films are ever-increasing. There is no limitation to the subject matter of the films.

Question 4.
Discuss the impact of Indian cinema on society.
Answer:
Indian cinema is no longer restricted to India and is now being well appreciated by international audiences. The contribution of the overseas market to Bollywood box office collections is quite remarkable. Indian cinema has become a part and parcel of our daily life whether it is a regional or a Bollywood movie. It has a major role to play in our society. Though entertainment is the keyword of Indian cinema it has far more responsibility as it impacts the mind of the audiences.

Passage 11
Read the passages and answer the questions given below.

How does one tackle social problems? How do societies deal with the social problems that they have to confront? Why do social problems arise? These are some questions that learners of Sociology need to address.

Societies have culture; both of these are created by people, cumulatively, through the network of relationships over thousands of years. Every society has its normative system – customs, folkways, fashions, mores, taboos, fads, laws. Social norms are guidelines for human behaviour. They tell us what is expected of us and at the same time, what to expect from others.

Are these expectations permanent and unchanging? When can they change? Who changes them? Why must they change? Again, these are questions that one might ask. Social problems can arise when the expectations are not communicated effectively, or when individuals or groups choose to disagree with the expectation. This can lead to situations of conflict – not just ideological but also a conflict that leads to hurting others’ sentiments, abuse, violence, injustice, upheavals, normlessness, and even war.

Question 1.
What do you understand by normative aspects of culture, are these expectations permanent? When do they change?
Answer:
The normative aspects of culture consist of customs, folkways, fashions, mores, taboos, fads, laws. Social norms are guidelines for human behaviour. They tell us what is expected of us and at the same time, what to expect from others. These expectations are not permanent as appropriate and inappropriate behaviour often changes dramatically from one generation to the next. Norms can and do change over time. Karl Marx believed that norms are used to promote the creation of roles in society which allows people of different levels of social class structure to be able to function properly, hence any change in social structure may lead to change in the normative aspect of culture.

Question 2.
How does the social problems arise in society?
Answer:
Although not considered to be formal laws within society, norms still work to promote a great deal of control. Norms are more specific and they are rules of conduct that guide people’s behaviour. Therefore, when an individual or a group of people behave and act in a certain way that is in contradiction to society’s values or norms, it can create a social problem. Social problems can arise when the expectations are not communicated effectively, or when individuals or groups choose to disagree with the expectation. This can lead to situations of conflict – not just ideological but also a conflict that leads to hurting others’ sentiments, abuse, violence, injustice, upheavals, normlessness, and even war.

Passage 12
Read the passages and answer the questions given below.

Sarva Shiksha Abhiyan (SSA) is a Government of India programme that makes education for children between the ages 6-14 free and compulsory. This programme was pioneered by the former Indian Prime Minister Shri Atal Behari Vajpayee in 1993-94. It became totally operational from 2000-2001. This programme made education a Fundamental Right.

Along with this, the Government of India also launched the National Programme of Nutritional Support to Primary Education (NP-NSPE) on 15th August 1995. From here emerged the concept of free ‘Midday Meal’for for children going to schools which were managed by local bodies like Gram Panchayats and Municipal Corporations. The Midday Meal is mandatory. It is taken for granted that the children should be given good, nutritious food on a daily basis. A lot of organisation goes into the cooking and delivering of these meals to the schools on time.

Universal Education goes hand in hand with Nutrition. Children of the village and municipal schools look forward to this meal. For several of them, it is perhaps the main meal of the day.

Question 1.
Discuss the various child welfare programmes launched by the government of India.
Answer:
Sarva Shiksha Abhiyan (SSA) is a Government of India programme that makes education for children between the ages 6-14 free and compulsory. This programme was pioneered by the former Indian Prime Minister Shri. Atal Behari Vajpayee in 1993-94. It became totally operational from 2000-2001. This programme made education a Fundamental Right.

The Government of India also launched the National Programme of Nutritional Support to Primary Education (NP-NSPE) on 15th August 1995.

Free ‘Midday Meal’ for children going to schools which were managed by local bodies like Gram Panchayats and Municipal Corporations was also launched later. The Midday Meal is mandatory. It is based on the fact that the children should be given good, nutritious food on a daily basis.

Question 2.
What is the objective of the Midday Meal Scheme? Where does the responsibility of implementation of midday meal scheme lie?
Answer:
The Midday Meal Scheme is a school meal programme of the government of India designed to improve the nutritional status of school children nation wise. The objective of the Midday Meal Scheme is to provide a cooked meal to the children as should be given good, nutritious on a daily basis. The meal is mandatory.

A lot of organisation goes into the cooking and delivering of these meals to the schools on time. Universal Education goes hand in hand with nutrition. Children of the village and municipal schools look forward to this meal. For several of them, it is perhaps the main meal of the day.

The responsibility of implementation of the Midday Meal Scheme lies with local bodies like Gram Panchayats and Municipal Corporations.

Question 3.
How effective are the children’s welfare programmes in India?
Answer:
Keeping in view the problems and challenges faced by children various programmes and policies are implemented for the welfare of children in India. Sarva Shiksha Abhiyan (SSA) is a Government of India programme that makes education for children between the ages 6-14 free and compulsory. As a result, the enrolment percentage of school children has gone up. Similarly, Mid-day Meal is mandatory. A lot of organisations goes into the cooking and delivering of these meals to the schools on time. Universal Education goes hand in hand with Nutrition. Children of the village and municipal schools look forward to this meal. For several of them, it is perhaps the main meal of the day.

Balbharti Maharashtra State Board Class 12 Sociology Solutions Chapter 6 Social Problems in India Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Sociology Solutions Chapter 6 Social Problems in India

1A. Complete the following statements by choosing the correct alternative given in the brackets and rewrite it.

Question 1.
The Domestic Violence Act was passed in the year ___________ (1995, 2005, 2011)
Answer:
2005

Question 2.
One of the causes of farmer suicide is ___________ (multi-cropping, indebtedness, climate change)
Answer:
indebtedness

1B. Correct the incorrect pair and rewrite it.

Question 1.
(a) Marijuana – Drug addiction
(b) Violent films – Internet addiction
(c) Selfitis syndrome – Substance addiction
(d) Country liquor – Alcohol addiction
Answer:
(c) Selfitis Syndrome – Mobile addiction

1C. Identify the appropriate term from the given options in the box and rewrite it against the given statement.

Narcotic drugs, Patriarchy, Gender discrimination

Question 1.
A problem faced by transgender persons,
Answer:
Gender discrimination

Question 2.
It can lead to physical health problems.
Answer:
Narcotic drugs

1D. Correct underlined words and complete the statement.

Question 1.
Alcoholics Anonymous helps drug addicts.
Answer:
Narcotic Anonymous helps drug addicts

Question 2.
Aging is an artificial process.
Answer:
Aging is a natural process.

2. Write short notes.

Question 1.
Effects of addiction
Answer:
Addiction means, a situation of psychological and physical dependence on alcohol, drugs, the internet, or mobiles.
The psychological effect on the individual: Addiction leads to a dependency on alcohol, narcotic drugs, medicinal drugs, the internet, social media, and even mobile phone. There could emerge a need for validation for every single image that is uploaded.

Impact on family: Alcohol addiction problems pose a threat to stable family life resulting in domestic violence. Addiction to mobiles can lead to loneliness within the family because of a lack of communication.

Impact on health: The levels of stress, anxiety, and aggression can take their toll on the physical, mental and emotional well-being of addicts as well as others in the family.

Impact on work: it can adversely affect levels of commitment, efficiency, an increase in instances of sexual harassment, exploitation of vulnerable people, inability to focus on any activity, increased absenteeism, etc.

Question 2.
Measures to tackle the problem of aging.
Answer:
Aging is an inevitable and irreversible biological process.
Role of the Government – The Ministry of Social Justice and Empowerment has the responsibility to formulate policies and implement programmes for the care of the aged.

POLICY – The National Policy on Older Persons (NPOP) envisages support from the state government towards older persons’ care via. the provisions of shelter, support, healthcare facilities, etc.

Role of organizations/NGOs – NGOs HAVE contributed significantly towards helping the problem of the aged in India. For example, in Help Age India, Harmony India Today there are online communities that can lend support.

Role of Education – Schools can help through community service projects, outreach programmes, socially useful productive work and NSS create awareness about the problems of the elderly, aged, and senior which can inculcate values of caring for them.

Role of Family – Parents, and relatives can play a major role in creating a suitable atmosphere within the involving them in activities.

Above are the measures which we can implement to tackle the problem of aging.

3. Write differences.

Question 1.
Social Problem and Individual Problem
Answer:

Social Problem	Individual Problem
(i) Meaning: A social problem is faced by numerous persons is described as a social problem.	(i) Meaning: A problem that is faced by an individual and his/her family is described as an individual problem.
(ii) Effects: Anti-social norms behaviour is considered as a social problem as it affects the wellbeing of the entire society.	(ii) Effects: An individual’s own habit, lethargy, inertia, personality is an individual problem that may affect the well-being of an individual, thus the cause of the problem rests with the individual.
(iii) Solution: Removal of social problems requires collective efforts to the wellbeing of the entire society.	(iii) Solution: The efforts of the concerned individual may be sufficient to save his/her problem.
(iv) Nature: A social problem is rooted in the individuals who constitute the society. When the problem of poverty is tackled, the problem of poor individuals gets solved.	(iv) Nature: When the scope of a personal problem enlarges and is faced by numerous individuals, it becomes a social problem, e.g. Unemployment
(v) For example, Ageing, Unemployment, Farmers’ Suicide, Domestic Violence, Addiction, corruption, overpopulation are social problems.	(v) For example, lack of job opportunities, matching one’s education or skills, conventional mindsets of a community, lack of political will, etc., are individual problems.

Question 2.
Mobile addiction and Drug addiction
Answer:

Mobile addiction	Drug addiction
(i) Nature: It refers to an obsession with mobile phones for various reasons, and a desire to constantly upgrade one’s mobile phone.	(i) Nature: It refers to a physical and biological dependence on drugs which leads to unpleasant symptoms when the person stops using the substance.
(ii) Causes Easy access to the internet due to which it is flooded with information, misuse of mobile phones for destructive, negative, and vested purposes.	(ii) Causes Peer pressure, curiosity, personal and psychological conditions such as depression/inferiority/superiority complex.
(iii) Effect: Almost constantly on call, cybersex addiction, online compulsions, virtual relationships, etc., are the effects of mobile addiction.	(iii) Effect: Dependency on drugs, stress, anxiety, aggression or irritability can take its toll on addicts. Inability to focus on activity etc., are the effects of drug addiction.
(iv) Measures: Self-assessment, getting involved in participative activities such as hobby classes, sports and games can help in building positive experiences for individuals which can help to tackle mobile addiction.	(iv) Measures: Creating awareness among the public, counseling, laws, drug addiction clinic, mass media, etc., are the measures to tackle drug addiction.

4. Explain the following concepts with examples.

Question 1
Domestic Violence
Answer:

• Domestic violence refers to abuse within the family, violence implies psychological, emotional, verbal, and physical torture. It is a repeated/habitual pattern of behaviour. Domestic violence cuts across all classes, ages, categories, stress, and genders.
• Causes of domestic violence are patriarchal system, dysfunctional, relationships, vulnerability, etc.
• It is necessary to create awareness of the fact that domestic violence is not acceptable in a civilised 21st-century society.
  Examples: Snide remarks, bickering, labelling, verbal spats, and physical assault.

Question 2.
Skill Development
Answer:

• Skill development refers to the identification of skill gaps and developing the existing skills to enable a person to achieve his/her goals so that there will be no more problems of unemployment due to lack of adequate skills.
• The current generation lacks the required skills and there is a humongous gap between the skills existing in a person and the skills demanded by the industry.
• Hence there is a desperate need to cultivate skills especially those which are employment worthy or those which can promote self-employment, and develop the entrepreneurial potential of the learners.

For Example Rashtriya Uchchatar Shiksha Abhiyan (RUSA), the salient feature of which is to enable institutions of higher education for capacity building in different fields of employment, communication skills, analytical and research skill,s, etc.

5A. Complete the concept map.

Question 1.

Answer:

5B. State whether the following statements are True or False with reasons.

Question 1.
Technology is always useful for social progress.
Answer:
This statement is False.

Though technology produces skilled workers, good quality material and well-paid job opportunities, materialistic comfort, easy travel, communication of media, easy access to information, and present opportunities for social progress. It has an adverse impact too.

The Internet has given us access to data which is good for many reasons but the internet also is a means to an entire virtual world which can be problematic it may lead to internet addiction when there is a compelling need on the part of an individual to have to continuously access specific internet sites for gaming, adult sites, pornography, social media, entertainment, and stimulation.

Similarly, if one goes beyond a mobile phone like a gadget, to what the phone does for us, it opens a Pandora’s Box of possibilities like connectivity, social media networking, gaming, access to the web world, filming, editing, creative enterprises, and numerous apps serving a variety of needs which creates mobile addiction. It develops an urge to be on a call constantly and a habit of checking one’s messages during sleep also leads to anxiety caused by loss of one’s phone and contacts. Thus, technology can take a toll on mental and physical well-being too.

Question 2.
There is a strong causal relationship between addiction and socialisation.
Answer:
This statement is True.

Peer groups, family, neighbourhood, society, mass media are important agencies of socialisation. Generally, individuals do not opt consciously to become an ‘addict’. It is what they become over a period of time. Under the influence of several factors.

Peer pressure and social status – Friends in a group may knowingly or unknowingly pressurize others to adopt certain habits in order to ‘fit in’ which is common among students but it can also cut across other age categories e.g., the habit of smoking or ‘doing weed’ among friends.

Consuming narcotic drugs or imported brands of alcohol may be considered a fad in certain groups; non-conformity could lead to isolation or labelling. Thus, friends play important role in socialising addictive behaviour.

6. Give your personal response.

Question 1.
Why do you think women are usually the victims in most reported cases of domestic violence?
Answer:

• Yes, most women are the victims in most reported cases of domestic violence.
• Due to the patriarchal system in which says unwritten acceptance of male authority.
• Religious outlook and traditional mind are set especially in institutions like marriage, family, religion which gives supremacy of men over women in almost every sphere of life.
• Economic dependency of women on men.
• And women are most vulnerable in the weaker sections of society.
• So, I think women are usually the victims in most reported cases of domestic violence.

Question 2.
Discuss how keeping aged parents in a ‘Home for the Aged’ can have positive and negative consequences.
Answer:
Any statement/matter has two sides i.e., positive and negative. Same way keeping aged parents in a ‘Home for the aged’ can have positive and negative sides.
(i) First, we see the positive side:

• In the 21st century, couples both go to work in that case to get the proper care they prefer ‘Home for the aged’
• In these old age homes, elderly people meet many people of their age, this allows them to make new friends with whom they can talk and do various group activities.
• Old age home provides food on time and health care facility also.

(ii) Negative side:

• The materialist world and individualistic approach force people to depend on Home for Aged for taking care of their aging parents, depriving them of their responsibilities towards them.
• It’s the youngster’s duty to care for our old people and handle their needs.
• Most of the old age homes are lack basic amenities, so instead of caring for elderly persons, they may get face vulnerability in old age homes.

7. Answer the following question in detail. (About 150-200 words)

Question 1.
Discuss why farmers’ suicide is a social problem today. Suggest suitable socio-economic measures to support the farmers.
Answer:
India is described as an agrarian society, 70% Indian population is involved in agrarian work. Farmers are the pillar of the Indian agrarian workforce. The past decade has witnessed an increasing number of farmer suicides. Farmer suicide is a serious social problem. Farmer’s suicide is a social problem because it has an adverse impact on their families, spouse, children, economy, and society at large.

Following are the social-economic measures to support farmers:
Support to farmers in distress: Farmers need a support system to help them with various crises that arise due to irregular monsoons, crop failure, failure, indebtedness, etc.

Insurance: Life insurance for distressed farmers and this family and crop insurance against crop failure, failure of monsoons, destruction of agricultural produce by locusts or viruses, etc., should be provided to farmers.

Provisions for direct sales from farmers to buyers: Removal of middlemen, agents, brokers who grab a large share of the profits and leaving a meager sum for marginal/small farmers who actually put their sweat to grow the crop.

Water harvesting: Water is a basic and essential requirement for farming so for good yield. Effective measures for water harvesting and water management are necessary.

Role of banks: Banks and cooperative credit societies need to set up their systems in farmer-friendly ways. The disbursement of loans to farmers and also need to encourage a saving habit among farmers.

Multi cropping: Farmers need a strong support system from the government to provide training to farmers for growing two or more crops on the same piece of land in the same growing season.

Class 12 Sociology Chapter 6 Social Problems in India Intext Questions and Answers

Check your progress (Textbook Page No. 85)

Question 1.
State any three problems faced by the aging population.
Answer:
Problems faced by the aging population

• Economic dependence
• Lack of emotional empathy
• Isolation / loneliness
• Difficulty in accepting the aging problem

Question 2.
Suggest three measures for the problems faced by senior citizens.
Answer:

• Government should formulate policies and implement programs for senior citizens.
• Family should create a suitable atmosphere in the home, involving them in activities within the home.
• Creating awareness via. Social media in the society will widely spread the country and hopefully, old age homes will close down and the young generation will take care of their parents.

Check your progress (Textbook Page No. 88)

Question 1.
In your opinion what do you think our educational system needs to do to solve the problem of unemployment among youth and young adults?
Answer:

• There should be a change in the educational system, it should become need-based and learner-centered.
• Education should cultivate skills apart from knowledge, which is employment-worthy, or those which can promote self-employment.
• Vocational training.
• Industry-Education symbiosis.

Question 2.
Give two reasons why unemployment is unhealthy for a democratic society.
Answer:

• Unemployment leads to anti-social activities.
• It leads to youth towards addiction.
• Impact on mental health like frustration, disappointment, etc.

Question 3.
Is there a connection between population growth and unemployment? Discuss in brief.
Answer:
Yes, growing population growth is connected to other unemployment. The rising population is accompanied by rising in the labour force of the society which leads to a substantial chunk of the population to unemployment. Due to this, there is an imbalance between employment opportunities and popularity growth.

Check your progress (Textbook Page No. 91)

Question 1.
Discuss how multi-cropping will help farmers.
Answer:

• Multi cropping is the practice of sequentially growing two or more crops in the same piece of land during one growing season instead of just one crop.
• It allows farmers to achieve a better result by making practical use of resources such as soil, water, fertilizers, etc.
• Utilization of nutrients is maximum as crops having different nutritional requirements and grows simultaneously in the same piece of land.

Question 2.
Why do you think there is a problem with irrigation? Give two reasons.
Answer:

• Delays in completion of irrigation projects.
• Inter-state water disputes.
• Regional disparities in irrigation development.
• Waterlogging and salinity.
• The increasing cost of irrigation.

Question 3.
Discuss the role of counselling in tackling the problem of farmer’s suicide.
Answer:

• Counselling plays a significant role in alleviating stress and helping depressed farmers to improve their self-esteem.
• The cause of farmer suicide is mental stress, caused by debt, crop failure, social evil dowry, etc.
• Counselling helps to relieve mental stress and develop self-esteem among farmers.

Check your progress (Textbook Page No. 93)

With reference to the ‘Bell Bajao Andolan’.

Question 1.
Show the usefulness of such a campaign.
Answer:
Bell Bajao campaign was launched in India on 20th August 2008, founder of this campaign is Malaika Dutta.
It is an anti-social domestic violence campaign that gives local residents to take and stand against physical abuse through simple acts means to interrupt domestic violence.

• It is a great initiative that makes people stand against violence and fight for their rights.
• Such a campaign can create awareness even if 15% of people support this initiative it could reduce the number of domestic violence in India. India contains a number of cases against domestic violence.
• More than 200,000 phone calls are placed to the domestic violence hotline every year. Such initiative can decrease the number of domestic violence from 50% to 1%. If we spread this awareness to a large number.

Question 2.
What do you think is required for such a campaign to take off?
Answer:

• To gear up Bell Bajao campaign there should be initiative taken from men or a boy.
• The role of mass media plays a vital role for to create awareness about the Bell Bajao campaign.
• Without any hesitation, victims should take help then and then only domestic violence can be under control and the campaign motto will be successful.

Question 3.
Do you think such a campaign will succeed in metropolitan cities? Justify your response.
Answer:
Yes, in a metropolitan city’s chances are more than 40% will get success, in the campaign. As compared to rural India, in metropolitan cities literate and understanding, the heterogeneous public is more which is, that they are highly exposed to the materialistic world. Since they have easy access to social media via. internet, T.V, mobile phones. So as per my opinion awareness created through mass media about this campaign will conveniently reach metropolitan cities and it will result in remarkable success in this campaign.

Check your progress (Textbook Page No. 98)

Question 1.
If you know a friend who has an addiction problem. What role can you play to help the person?
Answer:
If my friend is addicted, I will try to help him to get rid of it.

• Involved him in a group activity.
• Will explain to him the negative effects and harmful to the body so that he will get alert, which means I will do counselling for my friend.
• Will ask him to develop some new hobbies like playing, dancing, etc.
• I will talk with his parents and will take their help to lead my friend towards a normal life.
• If any medical help is required then only I will avail health care facility to my friend.

Question 2.
Suggest two co-curricular activities that can be conducted in your school to solve the problem of mobile addiction.
Answer:

• Introduction to dramatics
• Elaborating library facility
• Sports
• Nature surfing
• Encouragement to performing Art- Dance, Music

Question 3.
Identify three negative consequences of internet addiction.
Answer:
Consequences of internet addiction:

• Lack of communication
• Self-centeredness
• Lack of confidence
• Depression
• Anxiety

Activity 1 (Textbook Page No. 83)

Hold a class discussion to share the problems faced by the aging population. Speak to your family members and share inputs.. If you can, speak to the elderly/aging people in your neighbourhood, informally and share these insights too.
Answer:
(i) Problems faced by the ageing population.

• Older people are experiencing remarkable changes in their physical and social-economic circumstances. In nuclear families, they are gradually marginalised in the decision-making process. Hence, the family that traditionally took care of the elderly or sick people, widows, and orphans have started to rely on society as a whole.
• Getting older or ageing process can seem daunting cause greying hair, wrinkles, forgetting the things apart from this ageing can bring about unique health issues.

(ii) Some of the problems faced by ageing people are listed down.

• Chronic health condition
• Physical injury
• Malnutrition
• Oral health
• Less immunity
• Mental health
• Cognitive health
• Sensory impairment
• Loss of bladder control and constipation
• Organ failure

Activity 2 (Textbook Page No. 85)

Form groups of 10 students. Each group collects data from 10 persons in your neighbourhood. Prepare a tool for data collection and use a personal interview technique or questionnaire to find out about their families: the size of family, educational level of each member, whether they are employed or not. Write a group report of about 10-15 pages. Present your findings in class.
Answer:
Sample of a survey/questionnaire
Topic-Research on unemployment
Gender…….
Age……….
No of members in family……
Yes/No Questions

• Are you working?
• Are you unemployed by choice?
• Is there a minimum level of wage below which you will not work?
• Are you trying to establish your own business?
• Are all the educated adults in your house employed?
• Is the market scenario difficult to get a well-paid job?

Activity 3 (Textbook Page No. 88)

Interview 5 working adults in the age group 22-30, in your local area. Find out about their educational background, work-life, and aspirations in life. Do you see any pattern in the responses that you receive? Discuss these in class.
Answer:

	Person 1	Person 2	Person 3	Person 4	Person 5
Name	X	Y	Z	A	B
Age	30	28	23	28	23
Residence	Worli	Worli	Worli	Worli	Lower Parel
Qualification	S.S.C	B.Com	H.S.C	B.Sc.	B.Com
Work-life	Tailor stitching trousers, shirts, blazers as per customers demand. Design clothes on a computer also.	Garment merchant purchasing raw material, finishing the garment.	No job [Playing cricket]	Chemist Own medical shop at Parel ‘Kumar Bros. Medical’	Financial manager in India Bulls, Parel. Analysis of target, monitoring cash flow, back-office service, etc.
Aspirations in life/ambitions in life	Fond of music wanted a career in music.	Wanted to become a famous merchant.	Want to become a famous cricketer and wanted to play for the nation.	To focus on my medical shop.	No ambition, now at a good post and happy in that position.

Activity 4 (Textbook Page No. 93)

Find out information about the ‘Bell Bajao AndoiaiT. Then, enact a small skit in your class.
Answer:
According to the national family health survey (NFHS), 37% of Indian women’s have been abused and harassed by their husbands almost 50% of the Indian population both men and women believe that it is okay and even justifiable that man beat up their wives which is okay but which is actually not.

“Bell Bajao Andolan” this campaign was launched in India on 20th August 2008. Bell Bajao Andolan is an anti-domestic violence campaign that gives local residents to take and stand against physical abuse through simple acts means to interrupt domestic violence. This campaign promotes individual action against domestic violence. The founder of this initiative was Malaika Dutt.

In India Bell Bajao Andolan was an initiative that men have to take against domestic violence act is the campaign sought to reduce the occurrence of domestic violence and discrimination against women.

Activity 5 (Textbook Page No. 96)

Class Discussion:
The impact of Internet addiction and mobile addiction on human life.
Answer:
Smartphone/mobile addiction, sometimes colloquially known as “nomophobia” which means fear of being without a mobile phone, is often fueled by an Internet overuse problem or Internet addiction disorder.

Impact of internet and mobile addiction on human life:

• Virtual relationships
• Cybersex addiction
• Anxiety
• Lack of confidence
• Self-centeredness
• Information overload
• Online compulsions
• Depression
• Lack of communication
• Stress

Activity 6 (Textbook Page No. 97)

Prepare a 7-10 minute street play on The problem of internet addiction. End with a message of hope. Perform the street play on your campus and then in your neighbourhood. (After taking necessary permissions).
Answer:
Students can perform a street play to create awareness about problems of internet addiction keeping in mind the following points to pass on as a message.

Everyone these days are hooked to their mobile phones. While we may overlook this as a common behaviours in the current times, the truth is that it has deep behavioural and social impacts. It impacts our health, relationships as well as work. People suffering from mobile addiction suffer from nomophobia which is the fear of being without or unable to use your mobile phone for some reason or the other.

Activity 7 (Textbook Page No. 98)

Make a list of 10 students’ activities that can be carried out in their leisure time. Find out from 10 of your peers about the activities they would take up, at least once every week. Tabulate your findings and share them with your class.
Answer:

Student	Activities
Student No. 1	Watching Netflix, Amazon Prime, playing PUBG
Student No. 2	Drawing, Doing exercise, Playing PUBG
Student No. 3	Studying, interested in political news, video chat with friends
Student No. 4	Doing exercise, watching TV, cooking different dishes
Student No. 5	Using DIY ideas for home, video chat with friends, watching Netflix
Student No. 6	Helping parents for household work, playing video games
Student No. 7	Working in mall
Student No. 8	Attending online classes of Std. 12th, doing craft activities
Student No. 9	Handling fruit shop, watching TV
Student No. 10	Helping parents in farming work, doing domestication of animals in the village

Activity 8 (Textbook Page No. 100)

View 10-15 Television advertisements and analyse the extent to which advertisements promote or reinforce: gender stereotypes. Also, try to find out advertisements that do not present gender stereotypes.
Have a class discussion after viewing select advertisements.
Answer:
In the world, the biggest platform to influence people is none other than television. Television has been used in society for awareness campaigns such as for Polio, Literacy, Covid-19, etc., but as we know every coin has two sides. Similarly, this platform is misused by many companies for their vested interests.

Example:
In the advertisement of a fairness cream, it implies that only fair women are beautiful and only they can climb the ladder of success, and if they are dark or brown then you won’t be successful and aren’t considered beautiful.

Simply for the sale of their product, these companies resort to blatant racism and age-old gender stereotypes, indirectly stressing that women should be fair.

Some examples of advertisements that do not present gender stereotypes are Sasa detergent powder, Rambandhu papad masala, Bajaj LED bulbs, etc.

Activity 9 (Textbook Page No. 100)

Important legislation is taking shape in the Maharashtra Legislation Assembly regarding the situation of women’s sugarcane cutters of the Beed district. Many of them have undergone ‘hysterectomy’ or removal of the uterus. Collect information and discuss it in class.
Answer:
Beed district: In the sugarcane cutter community, menstrual periods are considered a problem and they think surgery is the only option to get rid of it. Women in Vanjarwadi village said, 50% of women who have had hysterectomies say that it is the norm in villages to remove the uterus after having two or three children.

The (Mukadam) contractor is keen to have women without wombs in his group of cane cutters. As per the contractors, menstrual periods make the cutting process slow, so there is no question of taking leave for a day or two, and work is halted. A contractor cannot afford to lose even a rupee.

Due to the removal of the uterus, there is a serious impact on the health of women, such as hormonal imbalance, mental health issues, gain weight, etc.

Action- of government: Maharashtra government has decided to make health check-ups compulsory for them before and after the sugar cane cutting season.

The government has asked doctors to submit a monthly report on the hysterectomy operations conducted by them.

Balbharti Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 12 Stock Exchange Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 12 Stock Exchange

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
A stock exchange is where stock brokers and traders can buy and sell ______________
(a) Gold
(b) Securities
(c) Goods
Answer:
(b) Securities

Question 2.
The ______________ is the first Stock Exchange to be recognized by the Indian Government under the Securities Contracts (Regulation) Act.
(a) BSE
(b) NSE
(c) OTCEI
Answer:
(a) BSE

Question 3.
______________ is a dealer in Stock Exchange who carries on trading of securities in his own name.
(a) Jobber
(b) Broker
(c) Bull
Answer:
(a) Jobber

Question 4.
A ______________ who expects fall in price of securities.
(a) bull
(b) bear
(c) Jobber
Answer:
(b) bear

Question 5.
The practice of buying and selling within the same trading day before the close of the market on that day is called ______________
(а) insider trading
(b) day trading
(c) auction
Answer:
(b) day trading

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) SEBI	(1) Expects the price of shares to rise in the future.
(b) Day Trading	(2) Expects the price of shares to fall in the future.
(c) Bull	(3) Buying and selling of securities during the same trading day.
(d) Bear	(4) To protect the interest of investors in the securities market.
(e) BSE	(5) Buying and selling of securities to particular investors.
	(6) One of the oldest stock exchanges in India.
	(7) To protect the interest of companies in the securities market.
	(8) Buying and selling of securities within a week.
	(9) Newest Stock Exchange in India.
	(10) One who invests in new issues of securities.

Answer:

Group ‘A’	Group ‘B’
(a) SEBI	(4) To protect the interest of investors in the securities market.
(b) Day Trading	(3) Buying and selling of securities during the same trading day.
(c) Bull	(1) Expects the price of shares to rise in the future.
(d) Bear	(2) Expects the price of shares to fall in the future.
(e) BSE	(6) One of the oldest stock exchanges in India.

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
A specific place where the trading of securities is arranged in an organized method.
Answer:
Stock Exchange

Question 2.
The first Stock Exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act.
Answer:
BSE

Question 3.
A dealer in the Stock Exchange who carries on the trading of securities in his own name.
Answer:
Jobber

Question 4.
A speculator who expects the price of shares rises in the future.
Answer:
Bull

1D. State whether the following statements are True or False.

Question 1.
A Stock Exchange is a reliable barometer to measure the economic condition of a country.
Answer:
True

Question 2.
Bombay Stock Exchange is the oldest Stock Exchange in India.
Answer:
True

Question 3.
A broker is a dealer in the Stock Exchange who carries on the trading securities in his own name.
Answer:
False

Question 4.
A Bear is a speculator who expects the prices of shares to rise in the future.
Answer:
False

1E. Complete the sentences.

Question 1.
The oldest Stock Exchange in India is the ______________
Answer:
BSE

Question 2.
A speculator who expects fall in prices of share ______________
Answer:
Bear

Question 3.
A person who buys or sells shares on behalf of his clients is called as ______________
Answer:
broker

Question 4.
The largest and most modern stock exchange in India is the ______________
Answer:
National Stock Exchange

1F. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(a) Regulator of Capital Market	(1) …………………..
(b) ……………………	(2) Nifty
(c) Jobber	(3) …………………..
(d) …………………..	(4) Oldest Stock Exchange in the world

(London Stock Exchange, Index of NSE, SEBI, Trades in securities in his own name)
Answer:

Group ‘A’	Group ‘B’
(a) Regulator of Capital Market	(1) SEBI
(b) Index of NSE	(2) Nifty
(c) Jobber	(3) Trades securities in his own name
(d) London Stock Exchange	(4) Oldest Stock Exchange in the world

1G. Answer in one sentence.

Question 1.
What is Stock Exchange?
Answer:
A Stock Exchange is a place or a platform where investors-individuals, institutions, or organizations meet to purchase or sell securities.

Question 2.
Who is a Broker?
Answer:
He is a licensed member of a stock exchange who transacts business on the behalf of his clients, being an agent between investors and jobbers.

Question 3.
Who is Jobber?
Answer:
A Jobber is a professional speculator in the stock exchange who carries on the trading securities in his name.

Question 4.
Who is a Bull?
Answer:
Bull (Tejiwala) is an optimistic speculator who expects the price of a share to rise in the future and buys with the hope of selling at a high price to earn profit.

Question 5.
Who is Bear?
Answer:
A bear is a speculator who expects the prices of shares to fall in the future and sells his securities at the prevailing prices to avoid loss.

Question 6.
Who is Lame Duck?
Answer:
A lame-duck is a bear broker whose expectations have gone wrong and makes a loss in his dealings.

Question 7.
What is a trading ring?
Answer:
The trading of shares that takes place during trading hours on the floor of the stock exchange is called the Trade Ring.

Question 8.
What is Sensex?
Answer:
Sensex is the index of the BSE which represents the increase or decrease in prices of stocks of a selected group of companies.

Question 9.
What is Rally?
Answer:
If the Sensex or Nifty moves in an upward direction over a period of 14 to 20 trading sessions, it is called as a rally.

Question 10.
What is Crash?
Answer:
If the Sensex or Nifty moves in a downward direction, it is called a crash.

1H. Correct the underlined word/s and rewrite the following sentences.

Question 1.
One of the functions of SEBI is to protect the interest of issuers of securities in the securities market.
Answer:
One of the functions of SEBI is to protect the interest of investors in securities in the securities market.

Question 2.
A Broker cannot directly deal with investors.
Answer:
A Jobber cannot directly deal with investors.

Question 3.
A Bear expects prices of shares to rise in the future.
Answer:
A Bull expects prices of shares to rise in the future.

Question 4.
A Bull buys new issues of securities from the primary market.
Answer:
A stag buys new issues of securities from the primary market.

Question 5.
A stock market is an important constituent of the money market.
Answer:
A stock market is an important constituent of the capital market.

2. Explain the following terms/concepts.

Question 1.
Stock Exchange
Answer:
Stock Exchange is a specific place where various types of securities are purchased and sold. The term securities include equity shares, preference shares, debentures, government securities, and bonds, etc. including units of mutual funds. They act as intermediaries between investors and borrowers, to provide safety and stability to the investors, stock exchanges in India are regulated by SEBI.

Question 2.
Broker
Answer:
He is a member of the stock exchange and is licensed by the stock exchange to buy or sell shares on his client’s behalf. He is an agent between the investors and Jobber and earns his income in the form of commission or brokerage.

Question 3.
Jobber
Answer:
A Jobber is a professional speculator in the stock exchange who carries on the trading securities in his own name. He buys securities as an owner and sells them at a higher price, and cannot deal with investors directly.

Question 4.
Bull
Answer:
A Bull is a speculator who is optimistic, expects the price of a share to rise in the future, and buys with the hope of selling them at higher prices to earn profit. A bull’s action leads to higher prices for securities as there is an excess purchase over sales.

Question 5.
Bear
Answer:
Bear (Mandiwala) is a pessimistic speculator who expects a fall in the price of a security, so he sells his securities at prevailing prices to avoid loss as he anticipates further fall in prices. His action leads to lowering prices as there is an excess of sales over the purchase.

Question 6.
Contract Note
Answer:
It is a note given by a broker to his client in a specific form, validating the transaction. Its copy comes immediately to both after the transaction within 24 hours.

3. Study the following case/situation and express your opinion.

1. Mr. Y is a practicing Company Secretary offering advisory services to companies, institutions, etc. on corporate laws including the Companies Act. He has received few queries from his clients, please assist Mr. Y in answering them.

Question (a).
BDI bank wants to offer DP services. Whom should they approach for registering as DP?
Answer:
If BDI bank wants to offer DP services, they should approach the concerned Depository for registering themselves.

Question (b).
KM Financial wants to offer Debenture Trustee services. Where should they apply for getting registered?
Answer:
If KM Financial wants to offer Debenture Trustee services then they should be registered with SEBI to act as Debenture Trustee.

Question (c).
TT Ltd. Co. wants to issue an IPO. Should it get itself registered with SEBI?
Answer:
The entire IPO process is regulated by SEBI, TT Ltd. Co should register with The U. S. Securities and Exchange Commission (SEC) which ensures that the company has made disclosures in detail thus TT Ltd will get the green signal to issue IPO.

2. Mr. P has recently got his B.Sc. degree. He has enrolled in a course in the securities market. As a new student of this subject, he has few queries as follows:

Question (a).
Does a company need to be listed on a stock exchange’s ability to sell its securities through the stock exchange?
Answer:
Yes, a company needs to be listed on Stock Exchanges to sell its securities through the Stock Exchange.

Question (b).
What is the term used for referring to a stock exchange’s ability to reflect the economic conditions of a country?
Answer:
A Stock Exchange is the “Economic Barometer” and acts as an economic mirror that reflects the economic conditions of a country, eg. Boom, recession period.

Question (c).
Which term refers to the functions of the stock exchange as a provider of a ready market for sale and purchase of security?
Answer:
The “Liquidity” function is the main function of the Stock Exchange as it provides a ready market for the sale and purchase of securities.

4. Distinguish between the following.

Question 1.
Jobber and Broker
Answer:

Points	Jobber	Broker
1. Meaning	A Jobber is one who buys and sells securities in his own name.	A broker is an agent who deals in buying and selling securities on behalf of his client.
2. Nature of Trading	A jobber carries out trading activities only with the broker.	A broker carries out trading activities with the jobber on behalf of his investors.
3. Restrictions on Dealings	A jobber is prohibited to directly buy or sell securities in the stock exchange. Also, he cannot directly deal with the investors.	A broker acts as a link between the jobber and the investors. He trades i.e. buys and sells securities on behalf of his investors.
4. Agent	A jobber is a special mercantile agent.	A broker is a general mercantile agent.
5. Form of Consideration	A jobber gets consideration in the form of profit. The positive difference between sale and purchase of securities.	A broker gets consideration in the form of commission or brokerage. The rate/amount of brokerage is fixed by stock exchanges.
6. Amount of Consideration	The amount of Consideration payable to Jobber is determined by the competition of jobbers.	The rate or amount of brokerage of a broker is fixed as per stock exchange provisions.

5. Answer in brief.

Question 1.
State the functions of SEBI.
Answer:
The various functions of SEBI are

• To protect the interest of investors in the securities stock market.
• To promote the development of securities markets.
• To regulate the business in stock exchanges and any other securities market.
• To register and regulate the working of stockbrokers, sub-brokers, share transfer agents, bankers to an issue, trustee of trust deeds, registrars to an issue, merchants bankers, underwriters, and such other intermediaries who may be associated with the securities market.
• To register and regulate the working of the Depositories, Depository Participants, Custodians of securities, foreign institutional investors, credit rating agencies.
• To register and regulate the working of venture capital funds and collective investment schemes including mutual funds.
  • To promote and regulate self-regulatory organizations.
  • To prohibit fraudulent and unfair trade practices relating to securities markets.
• To promote investors’ education and training of intermediaries of the securities market.
• To prohibit insider trading in securities.
• To conduct research and carry out publications.

Question 2.
State any four features of the Stock Exchange.
OR
What are the features of the Stock Exchange?
Answer:
According to the Securities Contracts (Regulation) Act 1956, the term stock exchange is defined as, “An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities.”

Husband and Dockerary have defined stock exchange as “Stock exchanges are the privately organized market which is used to facilitate trading in securities.”

The important features of a stock exchange are as follows:
(i) Market for Securities:
The stock exchange is a place where all types of corporate securities, as well as securities of government and semi-government bodies, are traded.

(ii) Second Hand Securities:
Securities traded in the Stock exchange are those securities that are already issued by the companies. In other words, second-hand securities are bought and sold among investors in a stock exchange.

(iii) Listed Securities:
Only securities that are listed with the stock exchange can be traded on a stock exchange. Listing of securities helps in protecting the interest of investors as companies have to strictly comply with the rules laid down by the stock exchange.

(iv) Organised and Regulated Market:
All Listed Companies have to comply with the guidelines of SEBI. Companies will also have to function as per the rules and regulations laid down by the Stock exchange.

(v) Specific Location:
The stock exchange is a specific physical place where securities are traded. It is a marketplace where brokers and intermediaries meet to conduct dealings in securities. Today, all trading is done electronically on a stock exchange.

(vi) Trading only through Members:
Securities in a Stock exchange can be traded only by the members of the exchange on their own behalf or through authorized brokers.

6. Justify the following statements.

Question 1.
The Securities and Exchange Board of India SEBI is the regulator for the securities market in India.
Answer:

• The Securities and Exchange Board of India was set up on 12th April 1988. The main purpose of setting up SEBI was to develop and regulate stock exchanges in India.
• The objectives of SEBI are to protect the interest of the investors and regulate the securities market in India.
• To bring professionalism in the working of intermediaries in the capital markets, i.e., brokers, mutual funds, stock exchanges, Demat- depositories, etc. is also a feature of SEBI.
• The role of SEBI also includes creating a good financial climate, so that companies can raise long-term funds through the issue of securities – shares and debentures.
• The main function of SEBI is to register and regulate the working of stockbrokers, sub-brokers, share transfer agents, bankers to an issue, trustee of trust deeds, registrars to an issue, merchant bankers, underwriters, and such other intermediaries who may be associated with securities market.
• Thus, it is rightly said that SEBI is the regulator of the securities market in India.

Question 2.
Stock exchanges work for the growth of the Indian economy.
Answer:

• The stock exchange is a specific place where the trading of securities is arranged in an organized method.
• The stock exchanges help in the process of rapid economic development by speeding up the process of capital formation as well as resource mobilization in India.
• It helps in raising medium-term capital as well as long-term capital for the development and expansion of the companies in the Indian economy.
• New industries and commercial enterprises can easily acquire capital funds for economic growth.
• It reflects a healthy financial and investment conducive atmosphere in the economy. It stimulates investment in the productive sector which accelerates the process of economic development of the nation.
• Thus, it is rightly said that the stock exchanges work for the growth of the Indian economy.

7. Answer the following questions.

Question 1.
Explain the functions of the Stock Exchange.
Answer:
Definition Of Stock Exchange: According to the Securities Contracts (Regulation) Act of 1956, the term ‘stock exchange’ is defined as “An association, organization or body of individuals, whether incorporated or not established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities.”

Husband and Dockerary have defined stock exchange as: “Stock exchanges are privately organized markets which are used to facilitate trading in securities.”

Stock Exchange performs various important functions discussed as follows:
(i) Mobilisation of Savings:
Stock markets are organized and regulated markets that protect the interests of the investors. It obtains surplus funds (savings) from individual households private and public sector units etc. and channelizes them in the proper direction. It thus provides a ready market for buying and selling securities.

(ii) Capital Formation:
Investors in securities are attracted due to good returns on investments and capital appreciation. The stock exchanges encourage investors to invest in the primary and secondary stock markets for investing in stock markets, investors need to save money. Savings lead to investment in shares and other securities. Such investments lead to capital formation.

(iii) Pricing of Securities:
The price of the securities are sold in the stock markets is based on demand and supply forces listed securities get prestige and reputation. When the prices of the shares go up constantly, their security value increases. The valuation of securities is useful to investors, the government, and creditors. The investors thus can gauge their investment worth and the creditors too can estimate the creditworthiness of a company.

(iv) Economic Barometer:
A stock exchange is a reliable barometer to measure the economic condition of a country. They encourage investors to invest and help companies to generate long-term funds thus promoting industrial development. The rise or fall in the share prices indicates the boom or recession cycle of the economy. The stock exchange is the pulse of the economy and the mirror that reflects the country’s economic status.

(v) Protecting Interest of Investors:
In the stock markets, only the listed securities are traded. The stock exchanges protect the interests of the investors through the strict enforcement of their rules and regulations. The securities Control (Regulation) Act 1956, provides rules for the functioning, licensing, and controlling speculations of stock exchanges. The SEBI also plays an important role in monitoring stock exchanges thus protect the interests of the investors by regulating intermediaries, monitoring speculation, and making the investors aware of their rights through IEPF, etc.

(vi) Liquidity:
The stock exchange facilitates liquidity by providing a ready market for the sale and purchase of securities. It provides marketability along with liquidity to investments in corporate enterprises. Because of stock exchange investors can convert a long-term investment into short-term and medium-term as it provides a two-way outlet by transforming money into an investment and vice versa without much delay.

(vii) Better Allocation of Capital:
The stock exchange regulates and controls the flow of investment from unproductive to productive, uneconomic to economic, unprofitable to profitable enterprises. Thus, savings of the people are channelized into industry yielding good returns, and under utilization of capital is avoided.

(viii) Contributes to Economic Growth:
The stock exchange help in the process of rapid economic development by speeding up the process of capital formation as well as resource mobilization. It helps in raising medium as well as long-term capital for the development and expansion of the companies. The resource of the economy flows from one company to another. This leads to capital formation as well as economic growth.

(ix) Providing Scope for Speculation:
Stock Exchanges’ like any other market provides a mechanism for evaluating the prices of securities through the basic law of demand and supply. Stock Exchange prices help to check the real worth of the securities in the market and thus permit healthy speculation of securities.

(x) Promotes the Habit of Savings and Investment: The stock market offers attractive opportunities for investment in various securities by obtaining funds from surplus units such as households, individuals, public sector units, central government, etc, and channelizing these funds for productive purposes.

Balbharti Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 11 Financial Market Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 11 Financial Market

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
A financial market is a market in which people trade _____________ and derivatives at low transaction costs.
(a) Gold
(b) Financial securities
(c) Commodities
Answer:
(b) Financial securities

Question 2.
When the trade bills are accepted by commercial banks it is known as _____________
(a) Treasury bills
(b) Commercial bills
(c) Commercial papers
Answer:
(b) Commercial bills

Question 3.
Money market is a market for lending and borrowing of funds for _____________ term.
(a) short
(b) medium
(c) long
Answer:
(a) short

Question 4.
Central Government is a borrower in the money market through the issue of _____________
(a) Commercial Papers
(b) Trade Bills
(c) Treasury Bills
Answer:
(c) Treasury Bills

Question 5.
_____________ is the market for borrowing and lending long term capital required by business enterprises.
(a) Money Market
(b) Capital Market
(c) Gold Market
Answer:
(b) Capital Market

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Financial Market	(1) Long term fund
(b) Money Market	(2) New issue market
(c) Primary Market	(3) Trading of commodities
(d) Commercial paper	(4) Short term fund
(e) Capital Market	(5) Trading of financial securities
	(6) Share market
	(7) Unsecured promissory note
	(8) Secured promissory note

Answer:

Group ‘A’	Group ‘B’
(a) Financial Market	(5) Trading of financial securities
(b) Money Market	(4) Short term fund
(c) Primary Market	(2) New issue market
(d) Commercial paper	(7) Unsecured promissory note
(e) Capital Market	(1) Long term fund

1C. Write a word or term or a phrase that can substitute each of the following statements.

Question 1.
A market where people trade financial securities and derivatives at low transaction costs.
Answer:
Financial Market

Question 2.
A market that provides long-term funds.
Answer:
Capital Market

Question 3.
A market that provides short-term funds.
Answer:
Money Market

Question 4.
A money market instrument is used by banks when one bank faces a temporary shortage of cash.
Answer:
Call Money

Question 5.
A bill is issued by the Reserve Bank of India on behalf of the Government of India.
Answer:
Treasury Bill

Question 6.
A market that exclusively deals with the new issue of securities.
Answer:
Primary Market

1D. State whether the following statements are True or False.

Question 1.
A Financial Market is a market in which people trade financial securities and derivatives at high transaction costs.
Answer:
False

Question 2.
The money market is the market for long-term funds.
Answer:
False

Question 3.
The capital market is the market for long-term funds.
Answer:
True

Question 4.
The primary market is also known as the new issue market.
Answer:
True

Question 5.
The secondary market is commonly known as the stock market.
Answer:
True

Question 6.
Commercial paper is a secured promissory note.
Answer:
False

Question 7.
Treasury bills are issued by commercial banks.
Answer:
False

1E. Find the odd one.

Question 1.
Treasury Bills, Shares, Certificate of Deposit.
Answer:
Shares

Question 2.
FPO, Private Placement, Commercial paper.
Answer:
commercial paper

Question 3.
New Issues Market, Call Money Market, Secondary Market.
Answer:
call money market

1F. Complete the sentences.

Question 1.
Funds borrowed and lent in money market are for _____________ term.
Answer:
short

Question 2.
When trade bills are accepted by commercial banks, it is known as _____________
Answer:
Trade Bill

Question 3.
Unsecured negotiable promissory notes issued by a commercial bank is called as _____________
Answer:
certificate of deposit

Question 4.
New shares, debentures, etc. are traded in _____________ market.
Answer:
primary

Question 5.
In capital market the instruments traded have maturity period of more than _____________ year.
Answer:
one

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(a) Money Market	(1) …………………..
(b) Zero risk instrument	(2) …………………..
(c) ………………….	(3) Capital Market
(d) …………………	(4) Secondary Market

(Buying and selling of existing securities, Treasury Bills, Funds for long term, Fund for short term)
Answer:

Group ‘A’	Group ‘B’
(a) Money Market	(1) Fund for short term
(b) Zero risk instrument	(2) Treasury bills
(c) Fund for long terms	(3) Capital Market
(d) Buying and selling of existing securities	(4) Secondary Market

1H. Answer in one sentence.

Question 1.
What is the financial market?
Answer:
A financial market is a market where financial securities are exchanged. It acts as an intermediary between investors and borrowers.

Question 2.
What is call a money market?
Answer:
The call money market is a market where funds are borrowed or lent for a very short period of 2 days to 14 days.

Question 3.
What is a Certificate of deposit?
Answer:
They are the negotiable term deposit certificates issued by commercial banks and financial institutions to build short-term finance.

Question 4.
What is a Trade bill?
Answer:
The seller draws a bill and the buyer accepts it, on acceptance, the bill becomes a marketable instrument called a Trade bill.

Question 5.
What is the new issue market?
Answer:
The market which is utilized to build fresh capital is called as ‘new issue market.’

1I. Correct the underlined word/s and rewrite the following sentences.

Question 1.
In the Primary market, already existing securities are traded.
Answer:
In the Secondary market, already existing securities are traded.

Question 2.
Companies sell fresh shares for the first time to the public in the secondary market.
Answer:
Companies sell fresh shares for the first time to the public in the Primary market.

Question 3.
In the Money market, the instruments traded have a maturity period of more than one year.
Answer:
In the Capital market, the instruments traded have a maturity period of more than one year.

Question 4.
The financial market can be classified as a capital market and call money market.
Answer:
The financial market can be classified as capital market and Money market.

2. Explain the following terms/concepts.

Question 1.
Financial Market
Answer:

• Every business unit has to raise short-term as well as long-term funds to meet the working and fixed capital requirements.
• In any economy, there are two different groups, one who invests money or lends money and the other who borrows or uses the money.
• The financial market acts as a link between these two different groups.
• The financial market provides a place or a system through which the transfer of funds by investors to the business units is adequately facilitated.
• A financial market consists of two major segments:
  • Money Market
  • Capital Market
• Money market deals in short-term credit and the capital market deals in medium-term and long-term credit.

Question 2.
Capital Market
Answer:

• It is a market for borrowing and lending long-term capital required by business enterprises.
• The financial assets dealt with in a capital market have a long or indefinite maturity period.
• The capital market forms an important core of a country’s financial system.

Definition:
G.H. Peters defines, “Capital Market as being the market or collection of inter-related markets in which potential borrowers are brought into contact with potential lenders.”

Question 3.
Money Market
Answer:

• A market where short-term funds are borrowed and lent is called ‘money market7. It is a market for financial assets that are close substitutes for money.
• The instruments dealt within the market are liquid and can be converted quickly into cash at a low transaction cost.

Definition:
According to the Reserve Bank of India, “The money market is the center for dealings mainly of short-term characters in money assets; it needs the short-term requirements of borrowers and provides liquidity or cash to the lenders. It is a place where short-term surplus investible funds at the disposal of financial, institutions or individuals are bid by borrower’s agents comprising institutions and individuals and also by the government itself.”

Question 4.
Call Money Market
Answer:

• Call money and Notice money market is an important segment of the money market in India. Under Call money, funds are lent or borrowed for very short periods i.e. one day.
• Under Notice money, funds are lent or borrowed for periods between 2 days to 14 days. Funds have to be repaid within a specified time on the receipt of the notice given by the lender.
• When one bank faces a temporary shortage of cash, then another bank with surplus cash lends money to it. Hence, the Call/Notice money market is also called as interbank Call money market.

Question 5.
Treasury Bills
Answer:

• Treasury Bills are short-term securities issued by the Reserve Bank of India on behalf of the Central Government of India to meet the government’s short-term funds requirement.
• Treasury Bills have three maturity periods – 91 days, 182 days, and 364 days. These bills are sold to banks and individuals, firms, institutions, etc. These bills are negotiable instruments and are freely transferable.
• The minimum value of T-bills is Rs. 25,000 or in multiples of Rs. 25000. These are issued at a discount and repaid at par and hence they are also called Zero-Coupon Bonds.

Question 6.
Commercial Bills
Answer:
Trade Bills/Commercial Bills:

• Bill of Exchange also called Trade bills are negotiable instruments or bills drawn by a seller on the buyer for the value of goods sold under credit sales.
• These have a short-term maturity period, generally of 90 days, and can be easily transferred.
• If the seller wants immediate cash, he can discount the trade bills with Commercial banks.

Question 7.
Repurchase agreement
Answer:
It is an agreement where the seller of security (i.e. one who needs money) agrees to buy it back from the lender at a higher price on a future date. Usually, this agreement is between RBI and commercial banks. RBI uses this agreement to control the money supply in the economy. These agreements are the most liquid of all money market investments having maturity ranging from 24 hours to several months.

Question 8.
Primary Market
Answer:

• It is a component of the financial market where short-term borrowing takes place.
• In the money market, the instruments are traded for not more than one year.

Question 9.
Secondary Market
Answer:

• The securities issued earlier are traded in the secondary market.
• It is the market where existing securities are resold or traded.
• Only listed securities can be dealt with in the secondary market.

3. Study the following case/situation and express your opinion.

1. Joy Ltd. Company is a newly incorporated company. It wants to raise capital for the first time by issuing equity shares.

Question (a).
Should d go to primary market or secondary market to issue its shares?
Answer:
Joy Ltd. should go to the primary market to issue equity shares in the market. Primary Market is mainly dealing with fresh issues of securities.

Question (b).
Should it offer its shares through public offer or rights issue?
Answer:
Joy Ltd. should offer its shares through public offer (IPO) as Joy Ltd. Company is going to its securities first time.

Question (c).
What will be the issue of Equity shares by Joy Ltd. Company called IPO or FPO?
Answer:
When Joy Ltd. issued its securities first time then it is called as IPO at the same time if Joy Ltd. offered securities for the second, third, or fourth time it is called a follow on public offering (EPO)

2. Mr. X is the CFO (Chief Financial Officer) of PQR Co. Ltd. which is a reputed company in the field of construction business. Often Mr. X has to decide on investing surplus funds of the company for short durations. And at times, he also has to decide the sources from where he can raise funds for short durations.

Question (a).
Assume on behalf of the company Mr. X has Rs. 5 lakhs and wants to invest for a short period. Should he buy Equity shares of Certificate of Deposit?
Answer:
As Mr. X wants to invest for a short period with the amount of Rs. 5 lakhs, then he should buy a certificate of deposit.

Question (b).
The company has surplus funds and wants to invest it. However, he needs the money back in 4 months, so should he invest in Treasury Bills or Government Securities?
Answer:
If he needs money back in 4 months, then he should invest in Treasury bills with the option of 91 days Maturity.

Question (c).
Can the company issue Certificate of Deposit?
Answer:
PQR Company Ltd. is a construction company. Hence it cannot issue a certificate of deposit as it can be issued by commercial banks and financial institutions only.

4. Distinguish between the following.

Question 1.
Primary Market and Secondary Market
Answer:

Points	Primary Market	Secondary Market
1. Meaning	The market is utilized for raising fresh capital in the form of shares and debentures.	It is a market where existing securities are resold or traded.
2. Function	The function is to raise long-term funds through fresh issues of securities.	The function is to provide a continuous and ready market for existing long-term securities.
3. Participants	The participants are financial institutions, mutual funds, underwriters, individual investors.	The participants of the primary market are the stockbrokers and the members of the stock exchange.
4. Listing Requirements	Listing is not required in the case of the primary market.	Only listed securities can be dealt with in the secondary market.
5. Determinants of Prices	The prices are determined by the management of the corporate house with due compliances with the SEBI requirements for the new issues of securities.	In the case of the secondary market, the price is determined by forces of demand and supply of the market and it keeps on fluctuating.
6. Issue of Prospectus	The prospectus is issued to invite the public to subscribe to the issue of shares.	The prospectus is not issued to the public.
7. Relation with investors	Direct contact with the investors at large is established by the companies.	There may not be direct contact with the investors who want to buy or sell the existing securities.

Question 2.
Money Market and Capital Market
Answer:

Points	Money Market	Capital Market
1. Meaning	A market where short-term funds are borrowed and lent.	A market for borrowing and lending long-term capital is required by the business enterprises.
2. Term of Finance	It provides short-term funds in short-term instruments where the maturity is measured in days, weeks, or months.	It is a market for long-term instruments which is measured in years.
3. Instruments	The instruments dealt in the market are bills of exchange, treasury bills, bankers’ acceptance, etc.	The instruments dealt in this market are bonds, debentures, equity shares, and stock.
4. Functions	Money Market exists as a mechanism of liquidity adjustment i.e. a link between depositors and borrowers.	Capital Market functions as a link between investors and entrepreneurs.
5. Risk	The prices of these instruments do not fluctuate and they carry very low market risk.	The instruments are long-term and subject to market fluctuations and so, they carry very high financial and market risk.
6. Institution	Commercial banks are important institutions in the money market.	The stock exchange is an important institution in the capital market.

5. Answer in brief.

Question 1.
State any four functions of the financial market.
Answer:
Functions of financial market:
(i) Capital formation:

• Capital is the main part of the functioning of the business.
• The capital market provides a channel through which savings flow to organizations in the form of capital.
• This leads to capital formation.

(ii) Transfer of Resources:

• The financial market is one of the key sources of transfer of resources.
• The financial market facilitates the transfer of real economic resources from lenders to ultimate users.

(iii) Mobilization of funds:

• Investors that have savings must be linked with corporate that require investment.
• The financial market enables the investors to invest their saving according to their choices and risk assessment.
• This will utilize funds and the economy will boom.

(iv) Price determination:

• The financial instruments traded in a financial market get their prices from the mechanism of demand and supply.
• The interaction between demand and supply will help to determine the prices.

Question 2.
State any four features of the money market.
Answer:
The features of the money market are as follows:
(i) No Fixed Place for Trading of Securities/Shares:
In the money market, there is no definite place to carry out lending and borrowing operations of securities or shares.

(ii) Involvement of Brokers:

• Dealings in such a market can be conducted with or without the participation of brokers.
• Companies, banks, etc. may directly deal in the money market.

(iii) Financial Assets:
The financial assets that are dealt in the money market are close substitutes for money as these assets can be easily converted into cash without any loss in value.

(iv) Organisations Involved:
The main organizations dealing in the money market in India are the Reserve Bank of India (RBI), State governments, banks, corporate investors, etc.

Question 3.
State any four features of the capital market.
Answer:
Following are the main features of the capital market:

• The link between investors and borrowers: The capital market links investors with the borrowers of funds. It routes money from savers to entrepreneurial borrowers.
• Deals in medium and Long-term investment: A capital market is a market where medium and long-term financial instruments are traded. Through this market corporate, industrial organizations, financial institutions access long-term funds from both, domestic and foreign markets.
• Presence of Intermediaries: The capital market operates with the help of intermediaries like brokers, underwriters, merchant bankers, collection bankers, etc. These intermediaries are important elements of a capital market.
• Promotes capital formation: The capital market provides a platform for investors and borrowers of long-term funds to trade. This leads to capital formation in an economy as it mobilizes funds.

Question 4.
Explain any 4 types of money market instruments.
Answer:
Instruments of Money Market:
(i) Commercial Paper:

• Commercial papers were first issued in the Indian money market in 1990.
• They are unsecured debt instruments.
• They are issued only by companies with strong credit ratings. They are issued at a discount rate. They are in the form of promissory notes.
• They are negotiable instruments i.e. they are freely transferable by endorsement and delivery.
• They are issued for a period of 15 days to 1 year.

(ii) Commercial Bills:

• When the goods are sold on credit, the buyer becomes liable to make payment on a specific date in the future.
• The seller draws a bill and the buyer accepts it. On acceptance, the bill becomes a marketable instrument called a Trade Bill.
• When a Trade Bill is accepted by a commercial bank, it is known as a commercial bill.
• They are in the form of negotiable instruments.
• They are usually issued for a period of 90 days. But this period can vary between 30 to 90 days.
• The liquidity of this bill is very high.
• It is the most common method to meet the credit needs of trade and industry.

(iii) Certificate of Deposits:

• Certificate of Deposits was first introduced to the money market of India in 1989.
• They are issued by commercial banks or financial institutions at discount, at par, or at market rate.
• They are in the form of promissory notes and stamp duty is applicable on the instrument.
• The maturity periods of this instrument are from 15 days to 1 year.
• The subscribers for certificates of deposits are individuals, associations, companies, trusts, etc.
• They are freely transferable by endorsement and delivery after a lock-in period of a minimum of 15 days.

(iv) Treasury Bills:

• Issue/Use of Treasury Bills was started by the Indian government in 1917.
• This instrument is issued by the government to institutions or the public to bridge the gap between receipts and expenditure.
• It is issued by the government on a discount for a fixed period not exceeding 1 year.
• These bills are in the nature of promissory notes containing a promise to pay the amount stated to the bearer of the instrument.
• The maturity period of this bill is 182 days.
• These bills enjoy a high degree of liquidity.

6. Justify the following statements.

Question 1.
Financial Markets act as a link between investor and borrower.
Answer:

• The financial market is the market that brings together borrowers and lenders.
• The financial market attracts fund from investors by offering them a variety of schemes and then collected fund is diverted into the business organizations.
• People having surplus cash invested into financial market securities, the financial market provides finance than to businesses.
• Similarly, when the financial market generates income from investments in business, it shares with the investor.
• Thus, it is a valuable link between borrower and lender.

Question 2.
Money Market makes available short-term finance through different instruments.
Answer:

• The money market is the market that provides short-term loans to businesses and governments.
• The loan period ranging from one day to one year.
• Call money and notice money provide finance for periods between 2 days to 14 days.
• Treasury Bills offer finance to the government for 91 days, 182 days, 364 days. Trade Bill or commercial bills offer finance up to 90 days.
• Commercial paper offers finance to the business organization from 7 days to 1 year. Money Market Mutual Fund offers finance for a maximum period of 1 year.
• Hence, the money market makes available short-term finance through different instruments.

Question 3.
Capital Market is useful for the corporate sector.
Answer:

• Capital Market is the market that provides loans for long-term periods. It is controlled by SEBI.
• It uses shares, debenture bonds, Mutual funds.
• The corporate sector issues these securities in the market and attracts saving from investors by offering them a variety of schemes. These savings become capital and get invested in the business.
• It is helpful to develop the corporate and industrial sectors.
• Thus, the capital market is useful for the corporate sector.

Question 4.
There are many participants in the money market.
Answer:
Some important participants in the money market are:
(i) Reserve Bank of India:
It is the most important participant in the money market. Through the money market, RBI regulates the money supply and implements its monetary policy. It issues government securities on behalf of the government and also underwrites them. It acts as an intermediary and regulator of the market.

(ii) Central and State Government:
Central Government is a borrower in the Money Market, through the issue of Treasury Bills (T-Bills). The T-Bills are issued through the Reserve Bank of India (RBI). The T-Bills represent zero risk instruments. Due to its risk-free nature banks, corporate, etc. buy the T-Bills and lend to the government as a part of its short-term borrowing program. The state government issues bonds called State Development Loans.

(iii) Public Sector Undertakings (PSU):
Many listed government companies can issue commercial paper in order to obtain their working capital.

(iv) Scheduled Commercial Banks:
Scheduled commercial banks are very big borrowers and lenders in the money market. They borrow and lend in the call money market, short notice market, Repo and Reverse Repo market.

(v) Insurance Companies:
Both the general and life insurance companies are usual lenders in the money market. They invest more in capital market instruments. Their role in the money market is limited.

(vi) Mutual Funds:
Mutual Funds offer varieties of schemes for the different investment objectives of the public. Mutual funds schemes are liquid schemes. These schemes have the investment objective of investing in money market instruments.

(vii) Non-Banking Finance Companies (NBFCs): NBFCs use their surplus funds to invest in government securities, bonds, etc. (Example of NBFC – Unit Trust of India)

(viii) Corporates:
Corporates borrow by issuing commercial papers which are nothing but short-term promissory notes. They are the lender to the banks when they buy the certificate of deposit issued by the banks.

(ix) Primary Dealers:
Their main role is to promote transactions in government securities. They buy as well as underwrite the government securities.

7. Answer the following questions.

Question 1.
Explain the functions of the financial market.
Answer:
Financial Market – Meaning:

• A financial market is an institution, that facilitates the exchange of financial instruments including deposits, loans, corporate stocks, bonds, etc.
• The financial market provides a place through which the transfer of funds by investors to the business is adequately facilitated.
• Financial Markets attract funds from investors and channelizes them to corporations.
• The financial market consists of money and capital markets. They help to raise short and long-term capital.

Functions of Financial Market:
(i) Capital formation:

• Capital is the main part of the functioning of the business.
• The capital market provides a channel through which savings flow to organizations in the form of capital.
• This leads to capital formation.

(ii) Transfer of Resources:

• The financial market is one of the key sources of transfer of resources.
• The financial market facilitates the transfer of real economic resources from lenders to ultimate users.

(iii) Mobilization of funds:

• Investors that have savings must be linked with corporates that require investment.
• The financial market enables investors to invest their savings according to their choices and risk assessment.
• This will utilize funds and the economy will boom.

(iv) Price determination:

• The financial instruments traded in a financial market get their prices from the mechanism of demand and supply.
• The interaction between demand and supply will help to determine the prices.

(v) Productive usage:

• Financial Market allow productive use of the fund.
• An excess fund of investors is used by the borrowers for productive purposes.

(vi) Enhancing Income:

• The financial market allows lenders to earn interest or dividends on their surplus funds.
• Thus, it helps in the enhancement of the individual and the national income.

(vii) Liquidity:

• The financial market provides a mechanism through which liquidating of financial instruments take place.
• Here, the investor can sell their financial instruments and convert them into cash.

(viii) Sale Mechanism:

• Financial Market provides a mechanism for selling a financial instrument by investors.
• It helps to offer the benefit of marketability and liquidity of such assets.

(ix) Easy access:

• Both industries and investors need each other.
• The financial market provides a platform where buyers and sellers can find each other easily.

(x) Industrial Development:
The financial market transforms saving into capital. Corporate use of funds of investors to undertakes productive or commercial activities leads to economic development.

Question 2.
State the instruments in the money market.
Answer:

• The money market is a market for borrowing and lending of funds for the short term.
• RBI is an apex body that controls the money market.
• The short period of time varies from one day to one year.

Instruments of Money Market:
(i) Commercial Paper:

• Commercial papers were first issued in the Indian money market in 1990.
• They are unsecured debt instruments.
• They can be, therefore, issued only by companies with strong credit ratings.
• They are issued by corporate houses for raising short-term finance mainly to finance their working capital requirements.
• They are issued at a discount rate. They are in the form of promissory notes.
• They are negotiable instruments i.e. they are freely transferable by endorsement and delivery.
• They are issued for a period of 15 days to 1 year.
• Face value is in multiples of ‘5 lakhs.
• The issuing company has to bear all expenses like dealer’s fees, agency fees, etc. related to the uses of the commercial paper.
• The rate of interest varies greatly as it is influenced by various factors such as the economy, the credit rating of the instruments, etc.
• The marketability of these instruments is influenced by the rates prevailing in the call market as well as the foreign exchange market.
• It used to be 30 days and it is further reduced to 15 days w.e.f 25th May 1998.

(ii) Commercial Bills:

• When the goods are sold on credit, the buyer becomes liable to make payment on a specific date in the future.
• The seller draws a bill and the buyer accepts it. On acceptance, the bill becomes a marketable instrument called a Trade Bill.
• When a Trade Bill is accepted by a commercial bank, it is known as a commercial bill.
• The seller draws a bill and the buyer accepts it.
• They are in the form of negotiable instruments.
• They are usually issued for a period of 90 days. But this period can vary between 30 to 90 days.
• The liquidity of this bill is very high.
• It is the most common method to meet the credit needs of trade and industry.
• The bank can rediscount the bills and are able to meet the short-term liquidity requirements.
• The commercial bill lacks development in the money market due to lack of bill culture, high stamp duty, inadequate credit backing, absence of a secondary market, etc.

(iii) Certificate of Deposits:

• Certificate of Deposits was first introduced to the money market of India in 1989.
• They are negotiable term deposit certificates.
• They are issued by commercial banks or financial institutions at discount, at par, or at market rate.
• They are in the form of promissory notes and stamp duty is applicable on the instrument.
• The maturity periods of this instrument are from 15 days to 1 year.
• The subscribers for certificates of deposits are individuals, associations, companies, trusts, etc.
• They are freely transferable by endorsement and delivery after a lock-in period of a minimum of 15 days.

(iv) Treasury Bills:

• Issue/use of Treasury Bills was started by the Indian government in 1917.
• This instrument is issued by the government to institutions or the public for raising short-term funds to bridge the gap between receipts and expenditure.
• It is issued by the government on a discount for a fixed period not exceeding 1 year.
• These bills are in the nature of promissory notes containing a promise to pay the amount stated to the bearer of the instrument.
• The maturity period of this bill is 182 days.
• These bills enjoy a high degree of liquidity.

(v) Government Securities:

• The marketable debt issued by the government or by semi-government bodies represents a claim on the government in known as government securities.
• These securities are issued by agencies such as central government, state government, local government such as municipalities, etc.
• These government securities are in the form of stock certificates, promissory notes, and bearer bonds.
• The liquidity is high for securities issued by the central government and limited for the state government and the local government.
• These securities are safe investments as payment of interest and repayment of the principal amount is guaranteed by the government.
• Rebates for investment in these securities are available under the Income Tax and other Acts.

(vi) Money Market Mutual Funds:

• It is a mutual fund that invests solely in money market instruments.
• These are issued by mutual fund organizations.
• They are in the form of debt.
• These mature in less than a year.
• They are very liquid.
• They are the safest and most secure of all mutual funds investments.
• The assets in money market funds are invested in safe and stable instruments of investments issued by the government, banks, corporations, etc.
• These mutual funds allow retail investors the opportunity of investing in money market instruments and benefit from the price advantage.

(vii) Repo Rate:

• It is the repurchase rate which is also known as the official bank rate.
• The repo rate is the discounted interest rate at which a central bank repurchases the government securities.
• It is the transaction that is carried by the central bank with the commercial bank to reduce some of the short-term liquidity in the system.

Question 3.
State the features of the capital market.
Answer:
Meaning:

• Capital markets provide medium and long-term loans to business enterprises.
• SEBI is responsible to control the working of the capital market.
• It attracts saving from people and form capital to the business.
• It is dealing in shares, debentures, bonds, mutual funds, etc.

Features of Capital Market:
Following are the main features of the capital market:
(i) Link between investors and borrowers:
The capital market links investors with the borrowers of funds. It routes money from savers to entrepreneurial borrowers.

(ii) Deals in medium and Long-term investment: A capital market is a market where medium and long-term financial instruments are traded. Through this market corporate, industrial organizations, financial institutions access long-term funds from both, domestic and foreign markets.

(iii) Presence of Intermediaries:
The capital market operates with the help of intermediaries like brokers, underwriters, merchant bankers, collection bankers, etc. These intermediaries are important elements of a capital market.

(iv) Promotes capital formation:
The capital market provides a platform for investors and borrowers of long-term funds to trade. This leads to capital formation in an economy as it mobilizes funds.

(v) Regulated by government rules, regulations, and policies:
The capital market operates freely. However, it is regulated by government rules, regulations, and policies.
For e.g. SEBI is the regulator of Capital markets.

(vi) Deals in marketable and non-marketable securities:
Capital market traders in both, marketable and non-marketable securities. Marketable securities are securities that can be transferred, e.g. Shares, Debentures, etc. and non-marketable securities are those which cannot be transferred, e.g. Term Deposits, Loans, and Advances.

(vii) Variety of Investors:
The capital market has a wide variety of investors. It comprises both, individuals like the general public and institutional investors like Mutual Funds, Insurance companies, Financial Institutions, etc.

(viii) Risk:
Risk is very high here as the instruments have long maturity periods. However, the return on investments is very high.

(ix) Instruments in capital market:

• Equity shares
• Preference shares
• Debentures
• Bonds
• Government securities
• Public Deposits.

(x) Types of Capital Market:
Capital market is mainly classified as-
(i) Government Securities Market or Gilt-edged markets:
In this market, government and semi-government securities are traded.

(ii) Industrial Securities Market:
In this market, industrial securities, i.e. shares and debentures of new or existing corporate are traded. This market is further divided into:

• Primary or New issues Market – Here companies sell fresh shares, debentures, etc. for the first time to the public.
• Secondary Market – Here already existing shares, debentures, etc. are traded through the Stock Exchanges.

Balbharti Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 10 Dividend and Interest Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 10 Dividend and Interest

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
Dividend is paid to ____________
(a) Shareholder
(b) Debenture holder
(c) Depositor
Answer:
(a) Shareholder

Question 2.
____________ is profit shared by company with a shareholder.
(a) Interest
(b) Rent
(c) Dividend
Answer:
(c) Dividend

Question 3.
Dividend is recommended by ____________
(a) Managing Director
(b) Secretary
(c) Board of Directors
Answer:
(c) Board of Directors

Question 4.
Interim Dividend is declared by ____________
(a) Board of Directors
(b) Debenture holders
(c) Depositors
Answer:
(a) Board of Directors

Question 5.
Final Dividend is declared by ____________
(a) Board of Directors
(b) Shareholders
(c) Depositors
Answer:
(b) Shareholders

Question 6.
Dividend cannot be declared out of ____________
(a) Capital
(b) Profit
(c) Reserves
Answer:
(a) Capital

Question 7.
Dividend amount should be transferred in a separate Bank Account within ____________ days of its declaration.
(a) 5
(b) 15
(c) 50
Answer:
(a) 5

Question 8.
Dividend should be paid within ____________ days of its declaration.
(a) 3
(b) 13
(c) 30
Answer:
(c) 30

Question 9.
____________ holders get dividend from residual profits.
(a) Equity share
(b) Preference share
(c) Debenture
Answer:
(a) Equity Share

Question 10.
Dividend is paid first to ____________ shareholders.
(a) Equity
(b) Preference
(c) Deferred
Answer:
(b) Preference

Question 11.
____________ warrant is a cheque containing dividend amount sent by company to the shareholders.
(a) Dividend
(b) Share
(c) Interest
Answer:
(a) Dividend

Question 12.
IEPF is created by ____________ where unpaid dividend is transferred by company.
(a) Central Government
(b) Company
(c) Shareholders
Answer:
(a) Central Government

Question 13.
Payment of ____________ Dividend must be authorised by the Articles of Association.
(a) Interim
(b) Final
(c) Bonus
Answer:
(a) Interim

Question 14.
____________ is a return paid to creditors by the company.
(a) Dividend
(b) Interest
(c) Rent
Answer:
(b) Interest

Question 15.
____________ is not linked to profits of the company.
(a) Dividend
(b) Interest
(c) Bonus
Answer:
(b) Interest

1B. Match the pairs.

Question (I).

Group ‘A’	Group ‘B’
(a) Dividend	(1) Equity Shareholders
(b) Interest	(2) Appropriation of Profit
(c) Interim Dividend	(3) Recommendation of Secretary
(d) Final Dividend	(4) Registrar of Company
(e) Fluctuating Rate of Dividend	(5) Obligatory to pay
	(6) Decided and Declared by the Board of Directors
	(7) Decided by Board and Declared by Members
	(8) Decided by President of India
	(9) Company not allowed to pay
	(10) Declared by Government of India

Answer:

Group ‘A’	Group ‘B’
(a) Dividend	(2) Appropriation of Profit
(b) Interest	(5) Obligatory to pay
(c) Interim Dividend	(6) Decided and Declared by the Board of Directors
(d) Final Dividend	(7) Decided by Board and Declared by Members
(e) Fluctuating Rate of Dividend	(1) Equity Shareholders

Question (II).

Group ‘A’	Group ‘B’
(a) Dividend	(1) Inform stock exchange about dividend declaration
(b) Interest	(2) Creditors
(c) IEPF	(3) Registered Shareholders
(d) Unpaid Dividend Account	(4) Balance of Unpaid Dividend Transferred
(e) Listed Company	(5) Unregistered Company
	(6) Non-listed company
	(7) Unpaid/Unclaimed Dividend
	(8) Balance of unpaid bonus transferred here
	(9) Must inform the government about dividend declaration
	(10) General Public

Answer:

Group ‘A’	Group ‘B’
(a) Dividend	(3) Registered Shareholders
(b) Interest	(2) Creditors
(c) IEPF	(4) Balance of Unpaid Dividend Transferred
(d) Unpaid Dividend Account	(7) Unpaid/Unclaimed Dividend
(e) Listed Company	(1) Inform stock exchange about dividend declaration

1C. Write a word or term or a phrase that can substitute each of the following statements.

Question 1.
The return on investment is paid to the shareholders of the company.
Answer:
Dividend

Question 2.
The meeting where the final dividend is declared.
Answer:
AGM (Annual General Meeting)

Question 3.
The company has to intimate the stock exchange about the declaration of dividends.
Answer:
Listed company

Question 4.
The shareholders get dividends at a fixed rate.
Answer:
Preference

Question 5.
The shareholders get dividends at a fluctuating rate.
Answer:
Equity

Question 6.
Request by the shareholder in the prescribed form for payment of dividend into shareholders bank amount.
Answer:
Dividend Mandate

Question 7.
The number of days within which payment of dividend be completed by the company after its declaration.
Answer:
30 days

Question 8.
Dividend declared between two AGMs.
Answer:
Interim Dividend

Question 9.
Dividend decided and declared by the Board.
Answer:
Interim Dividend

Question 10.
The return is paid to the creditors by the company.
Answer:
Interest

1D. State whether the following statements are True or False.

Question 1.
The dividend is paid to registered shareholders of the company.
Answer:
True

Question 2.
The dividend is decided by the Board.
Answer:
True

Question 3.
The dividend is decided by the shareholders.
Answer:
False

Question 4.
Dividend once declared cannot be revoked.
Answer:
True

Question 5.
Dividend cannot be paid out of capital.
Answer:
True

Question 6.
Shareholders decide about the rate and amount of profit to be given as dividends.
Answer:
False

Question 7.
All categories of shareholders get a fixed-rate dividend.
Answer:
False

Question 8.
IEPF is the fund created by the company.
Answer:
False

Question 9.
Interest is a liability for the company.
Answer:
True

Question 10.
Interest is paid to shareholders of the company.
Answer:
False

1E. Find the odd one.

Question 1.
Final Dividend, Interim Dividend, Interest
Answer:
Interest

Question 2.
Out of Capital, Out of free reserve, Out of money given by the government
Answer:
Out of Capital

Question 3.
Dividend Account, Dividend Mandate, Unpaid/ Unclaimed Dividend Account
Answer:
Dividend Mandate

Question 4.
Dividend warrant, Dividend Mandate, Cheque
Answer:
Dividend Mandate

1F. Complete the sentences.

Question 1.
Word dividend is derived from Latin term ____________
Answer:
Dividendum

Question 2.
Dividend is paid to ____________
Answer:
registered shareholders

Question 3.
Dividend can be declared only on recommendation of ____________
Answer:
Board of Directors

Question 4.
Dividend must be paid in ____________
Answer:
cash

Question 5.
The meeting at which final dividend is approved is ____________
Answer:
Annual General Meeting

Question 6.
Dividend cannot be paid out of ____________
Answer:
capital

Question 7.
Interim dividend is decided and declared by ____________
Answer:
Board of Directors

Question 8.
Predecided and a fixed rate of dividend is paid to ____________
Answer:
preference shareholder

Question 9.
Payment of dividend must be completed within ____________
Answer:
30 days

Question 10.
Payment of Interim Dividend needs to be authorized by ____________
Answer:
Articles of Association

Question 11.
The obligatory payment made by company to its creditors is called as ____________
Answer:
Interest

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(a) Dividendum	(1) ………………..
(b) Interest	(2) ………………..
(c) …………………	(3) Final Dividend
(d) ………………..	(4) Interim Dividend
(e) Government Fund	(5) …………………

(Latin term, Creditors, At AGM, At Board Meeting, IEPF)
Answer:

Group ‘A’	Group ‘B’
(a) Dividendum	(1) At Board Meeting
(b) Interest	(2) Latin term
(c) IEPF	(3) Final Dividend
(d) At AGM	(4) Interim Dividend
(e) Government Fund	(5) Creditors

Question 2.

Group ‘A’	Group ‘B’
(a) Preference Shares	(1)  ……………………
(b) Equity Shares	(2) ……………………..
(c) Deposit holders	(3) ……………………..
(d) …………………….	(4) Payment of Dividend
(e) …………………….	(5) Dividend Declared but not paid/claimed

(Fixed rate Dividend, Dividend at a Fluctuating Rate, Interest, within 30 days, Unclaimed/Unpaid Dividend)
Answer:

Group ‘A’	Group ‘B’
(a) Preference Shares	(1) Unclaimed/Unpaid Dividend
(b) Equity Shares	(2) Within 30 days
(c) Deposit holders	(3) Interest
(d) Fixed rate of Dividend	(4) Payment of Dividend
(e) Dividend at a Fluctuating Rate	(5) Dividend Declared but not paid/claimed

1H. Answer in one sentence.

Question 1.
What is Dividend?
Answer:
The dividend is a share in distributable profits of the company to which the shareholder in entitled when formally declared by the company.

Question 2.
Who has the right to recommend dividends?
Answer:
The Board of directors has the right to recommend.

Question 3.
What is a Final Dividend?
Answer:
The final dividend is that dividend that is declared and paid after the close of the financial year.

Question 4.
What is an Interim Dividend?
Answer:
The interim dividend is that dividend that is declared and paid between two AGMs of an accounting year.

Question 5.
Who declares Interim Dividend?
Answer:
The Board of directors declares Interim dividends.

Question 6.
Which shares get dividends at a fixed rate?
Answer:
Preference shares get dividends at a fixed rate.

Question 7.
Which shares get dividends at a fluctuating rate?
Answer:
Equity shares get dividends at a fluctuating rate.

Question 8.
At which meeting Interim Dividend is decided and declared?
Answer:
Interim Dividend is decided and declared in Board Meeting.

Question 9.
What is Interest?
Answer:
Interest is the price paid for the productive services rendered by capital

Question 10.
State the time within which unpaid dividends be transferred to the unpaid dividend account.
Answer:
The unpaid dividend should be transferred within 7 days of the end of 30 days within which payment has to be made.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
The dividend is paid to creditors.
Answer:
The dividend is paid to shareholders.

Question 2.
Interest is paid to shareholders.
Answer:
Interest is paid to creditors.

Question 3.
The final Dividend is paid between two AGM.
Answer:
Interim Dividend is paid between two AGM.

Question 4.
Special Resolution must be passed to declare the Final Dividend.
Answer:
An ordinary resolution must be passed to declare the Final Dividend.

Question 5.
The dividend must be paid within 60 days of its declaration.
Answer:
The dividend must be paid within 30 days of its declaration.

Question 6.
The Dividend to be paid should be transferred to Dividend A/c within 30 days of its declaration.
Answer:
The Dividend to be paid should be transferred to Dividend A/c within 5 days of its declaration

Question 7.
The dividend is an obligation to be paid by a company every year.
Answer:
Interest is an obligation to be paid by a company every year.

Question 8.
Preference shareholders are given the last priority in the payment of dividends.
Answer:
Equity shareholders are given the last priority in the payment of dividends.

Question 9.
Preference shareholders get dividends from residual profits.
Answer:
Equity shareholders get dividends from residual profits.

Question 10.
Dividend is payable every year irrespective of profits made by the company.
Answer:
Interest is payable every year irrespective of profits made by the company.

1J. Arrange in proper order.

Question 1.
(a) Recommendation of Dividend.
(b) Checking sufficiency of profits
(c) Board Meeting
Answer:
(a) Checking sufficiency of profits
(b) Board Meeting
(c) Recommendation of Dividend

Question 2.
(a) Transfer to Dividend Account
(b) Transfer to IEPF
(c) Transfer to Unpaid Dividend Account
Answer:
(a) Transfer to Dividend Account
(b) Transfer to Unpaid Dividend Account
(c) Transfer to IEPF

Question 3.
(a) Closure of Register of Members.
(b) Intimate Stock Exchange of Board Meeting.
(c) Intimate Stock Exchange of declaration of dividend.
Answer:
(a) Intimate Stock Exchange of Board Meeting
(b) Intimate Stock Exchange of declaration of dividend
(c) Closure of Register of Members

Question 4.
(a) Decision on Rate of Dividend
(b) Transfer of IEPF
(c) Payment of Dividend
Answer:
(a) Decision on Rate of Dividend
(b) Payment of Dividend
(c) Transfer to IEPF

Question 5.
(a) Payment of Interim Dividend
(b) Board meeting deciding and declaring Interim Dividend
(c) Authorization of Articles of Association
Answer:
(a) Authorization of Articles of Association
(b) Board meeting deciding and declaring Interim Dividend
(c) Payment of Interim Dividend

2. Explain the following terms/concepts.

Question 1.
Profit
Answer:
Profit is the financial gain from business activity minus expenses. Profit is the income remaining after deducting total costs from total revenue. It is also called financial gain. Profit is the difference between revenues and expenses for a given period. It is the tool for measuring the success of the business. Without profit, the company cannot survive in the market.

Question 2.
Dividend
Answer:
The term dividend is derived from the Latin word ‘Dividendum’ which means that which is to be divided. A dividend is the portion of the company’s earnings distributed to the shareholders decided and managed by the company’s board of directors. The dividend is a share in distributable profits of the company Shareholder is entitled to receive the dividend when it is formally declared by the company

Question 3.
Interest
Answer:
Interest is the cost of borrowing money typically expressed as an annual percentage of a loan. The money people earn on their savings is called Interest. Interest is paid to the lender by the borrower, in case of a loan or from the financial institution to the depositor, in the case of a savings account. In financial terms, it is a payment made for using the money of another i.e. borrower takes money from the lender. Interest is the cost of renting the money for the borrower and it is the income from lending money for the lender.

Question 4.
Final Dividend
Answer:
The final dividend is declared and paid after the financial year is closed. The final dividend is decided and recommended by the Board of Directors. The final dividend is approved by the shareholder in the AGM. The declaration of the final dividend does not require authorization of Articles of Association. The rate of the final dividend is always higher than the Interim dividend. It is declared from sources like the current year’s profits, money provided by Government for dividends, etc.

Question 5.
Interim Dividend
Answer:
The interim dividend is the dividend that is declared and paid in the middle of an accounting year i.e. before the finalization of accounts for the year. Dividend declared by the Board of Directors between two Annual General Meetings is called Interim Dividend. The interim dividend is paid in the middle of the accounting year.

Question 6.
Unpaid Dividend
Answer:
Dividend declared by the company but neither paid to nor claimed by a shareholder within 30 days of its declaration is termed as Unpaid and Unclaimed Dividend.

Question 7.
Unpaid Dividend Account
Answer:
A dividend declared by the company but neither paid to nor claimed by a shareholder is called an Unpaid/Unclaimed Dividend. This unpaid/unclaimed dividend should be transferred to the Unpaid/Unclaimed Account within 30 days of its declaration. This ‘Unpaid Dividend Account’ is opened in a scheduled Bank by the company.

Question 8.
Dividend Mandate
Answer:
The dividend is paid by different modes of payment like cash, cheque, or warrant or by electronic mode. It can also be paid by using the Dividend Mandate. If the shareholder wishes to get dividend credited directly in the Bank Account he is required to send a request in a prescribed form which is called ‘Dividend Mandate’. The dividend Mandate authorizes the company to pay dividends directly to shareholders’ bankers.

Question 9.
IEPF
Answer:
IEPF means Investors Education and Protection Fund. Any amount in the Unpaid Dividend Account of a company that is unpaid/ unclaimed for a period of 7 (seven years) from the date of such a transfer shall be, transferred to ‘Investors Education and Protection Fund’. The claimant can claim his dividend by filling the prescribed form and submitting the necessary documents. The claimant needs to follow the procedure.

Question 10.
Rate of Dividend
Answer:
The return that a shareholder receives on his investment from the company is called a dividend. The dividend is always declared by the company on the face value of a share irrespective of its market value. The rate of dividend is expressed as a percentage of the face value of a share per annum.

3. Study the following case/situation and express your opinion.

1. LMN Co Limited decides to declare a dividend for the financial year 2018-19 in which it has earned profits less than their expectations.

Question (a).
Is Board right in recommending a dividend of Rs. 5/- per share out of free reserves?
Answer:
Yes, Board is right in recommending a dividend of Rs. 5/- per share out of free reserves, as dividends can be paid out of free reserves.

Question (b).
Can Board declare the dividend though it is not approved by AGM?
Answer:
No Board cannot declare the divided if it is not approved by AGM as dividends should be approved by shareholders by passing an ordinary resolution in AGM.

Question (c).
Can the Board give dividends in the form of gifts?
Answer:
No Board cannot give dividends in the form of gifts. It must be paid in cash, not in kind.

2. ABC Co. Ltd. decides to pay Interim Dividend.

Question (a).
Can it be paid out of free reserves?
Answer:
No. the Interim Dividend cannot be paid out of free reserves.

Question (b).
Is the Board right in declaring the same at the Board Meeting?
Answer:
Yes. Board is right in declaring the same at the Board meeting as it has the power to declare an Interim Dividend.

Question (c).
Can the company distribute the same within 30 days of its declaration?
Answer:
Yes, after the declaration, the Interim dividend should be paid within 30 days of its declaration.

3. RAJ Company limited decides to pay Interim Dividend.

Question (a).
Is the Board justified to decide Interim Dividend of Rs. 5/per share even though profits to date are insufficient?
Answer:
The interim dividend is paid out of profits between two annual general meetings. It cannot be paid out of any reserves. So it is not justified.

Question (b).
Can the Board declare it out of Free Reserves?
Answer:
No Board cannot declare an Interim dividend out of free reserves.

Question (c).
Can the Board declare it out of Capital?
Answer:
No Board cannot declare out of capital.

4. DIAMOND Co. Ltd. is considering declaring an Interim Dividend.

Question (a).
In how many days of the declaration it should transfer the funds to Dividend Account?
Answer:
The interim dividend must be transferred to the Dividend Account within 5 days of its declaration.

Question (b).
In how many days it must pay it to shareholders?
Answer:
The interim dividend should be paid within 30 days of its declaration to shareholders.

Question (c).
In how many days of the declaration it must transfer the funds to the Unpaid Dividend A/c?
Answer:
Unpaid/unclaimed Interim dividend should be transferred to ‘Unpaid Dividend Account’ within 7 days of the expiry of 30 days of declaration i.e. 37 days of its declaration.

5. The Board of Directors of STAR Co. Ltd. which is a listed company recommends a dividend of Rs. 15/- per share to be paid in cash.

Question (a).
Is it justified to pay the dividend firstly to its Preference Shareholders and then after to Equity Shareholders?
Answer:
Yes, because preference shares are entitled to the dividend before it is paid to the equity shareholder. Equity shareholders get dividends from residual profits i.e. after paying to preference shareholders.

Question (b).
Is the AGM required to approve the same?
Answer:
Yes for declaration of final divided Approval of AGM is a must.

Question (c).
Can the company pay dividends in cash?
Answer:
Yes, the company pay a dividend in cash and not in kind.

6. GOLD Co. Ltd. declares a dividend of Rs. 10/- per share for F.Y. 2018-19.

Question (a).
Is the company under default, if the dividend was not paid within 30 days of its declaration?
Answer:
Yes, the company is to default as the time limit within which the company must pay dividends after the declaration is 30 days.

Question (b).
Is the company right in transferring the unpaid dividend to its Debenture Reserve Account?
Answer:
No, the company has to transfer the total amount of dividend which remains unpaid/unclaimed to the ‘Unpaid Dividend Account.

Question (c).
Does the company have to transfer the amount of unpaid dividend to IEPF after 30 days?
Answer:
No, any amount in the unpaid dividend account of a company that remains unpaid/unclaimed for a period of 7 years from the date of such a transfer, should be transferred to (IEPF), ‘Investors Education and Protection Fund’.

4. Distinguish between the following:

Question 1.
Final Dividend and Interim Dividend
Answer:

Points	Interim Dividend	Final Dividend
1. Meaning	Interim Dividend is the dividend that is declared between two Annual General Meetings of a company.	The final Dividend is the dividend that is declared at the Annual General Meeting of a company.
2. When declared?	It is declared between two Annual General Meetings.	It is declared after the completion of the financial year of the company.
3. Who declares?	The interim dividend is declared by the Board of Directors by passing a resolution.	The final dividend is decided and recommended by the Board of Directors. It is declared by the shareholders.
4. Authorization	Authorization of Articles is necessary for the declaration of interim dividends.	Authorization of Articles is not necessary for the declaration of the final dividend.
5. Rate of Dividend	The rate of the Interim dividend is lower than the final dividend.	The rate of the final dividend is always higher than the Interim dividend.
6. Source	It is declared out of profits of the current accounting year.	It is declared from different sources like the current year’s profits, free reserves, capital profits, money provided by Government for dividends, etc.
7. Accounting Aspect	It is declared before the preparation of the final accounts of the company.	It is declared only after the accounts of the year are prepared and finalized.

Question 2.
Dividend and Interest
Answer:

Points	Dividend	Interest
1. Meaning	The dividend is the return payable to the shareholders of the company for their investment in the share capital.	It is the return payable to the creditors of the company. For e.g. Debenture holder, Deposit holders.
2. Intervals	Dividends need not be paid on regular basis and they can vary according to the company’s profits.	Interest has to be paid at regular intervals at a fixed rate.
3. Given to whom	It is paid to the member i.e. the owners of the company.	It is paid to the creditor of the company.
4. Expense	Dividends are not the expense as they are based on the profit made. If no profit, they are not paid for that period.	Interest is the expense to the company.
5. Rate of Dividend	The rate of the Interim dividend is lower than the final dividend.	The rate of the final dividend is always higher than the Interim dividend.
6. Obligation	It has to be paid only when the company made profits.	It is not linked to the Profits of the company. It is an obligation for the company.
7. When payable	It is payable when a company earns sufficient profit.	It is payable every year irrespective of the profits of the company.
8. Rate	It is paid at a fluctuating rate to the equity shareholders.	The rate of Interest is Fixed and pre-determined at the time of issue of the security.

5. Answer in brief.

Question 1.
State any four points to be kept in mind by a listed company with respect to dividends.
Answer:
When a company lists its shares on Stock Exchange, additional listing agreements are to be followed which are as follows:

• Stock exchange should be informed if the securities are listed 2 days prior to the Board meeting in which recommendation of final dividend is to be considered.
• Stock Exchange should be informed immediately regarding the declaration of dividend as soon as the Board meeting gets over.
• Notice of closing book should be informed at least 7 (seven) working days before the closure to the stock exchange.
• Transfer Register and Register of Members should be closed.

Question 2.
Discuss any four features of dividend.
Answer:

• It is the portion of profits of the company paid to its shareholders.
• It is payable out of profits of the company.
• It is an unconditional payment made by the company.
• If the company has issued equity shares with differential rights as to dividend, the terms of issue of such shares will govern the rights of shareholders about receiving the dividend.

Question 3.
Explain the features of interest.
Answer:
Interest is the cost of borrowing money typically expressed as an annual percentage of a loan. The money people earn on their savings is called Interest. Interest is paid to the lender by the borrower in case of a loan or from the financial institution to the depositor in the case of a savings account. In financial terms, it is a payment made for using the money of another i.e. borrower takes money from the lender. Interest is the cost of renting the money for the borrower and it is the income from lending money for the lender.
Features:

• Interest is the price paid for the productive services rendered by capital.
• Interest has a direct relation with risk. The higher the risk, the higher is the interest.
• The rate of interest is expressed as the annual percentage of the principal.
• The rate of interest is determined by various factors like money supply, fiscal policy, the volume of borrowings, rate of inflation, etc.
• Interest is a charge against the profit of the Company. Even if, the company makes no profit, interest should be paid.
• The rate of interest is fixed and pre-determined.

6. Justify the following statements.

Question 1.
The dividend is paid out of the profits of the company.
Answer:

• The dividend is the portion of profits of the company paid to its shareholders.
• It is payable out of profits of the company.
• Dividend can be paid out of capital profits on fulfilling these conditions.
• Capital Profits are realized in cash.
• Articles of Association of the company permit such a distribution.
• It remains as profits after revaluation of all assets and liabilities.
• Thus, it is rightly justified that dividend is paid out of profits of the company.

Question 2.
Interim dividends cannot be paid out of free reserves.
Answer:

• Dividend declared by the Board of Directors between two Annual General Meetings is called Interim Dividend.
• The interim dividend shall not be declared out of free reserves.
• In the event of a loss or inadequacy of profits during a financial year, no interim dividend shall be declared.
• The declaration of an interim dividend does not create a debt against a company.
• The board of directors can cancel an interim dividend after declaring it.
• Thus, it is rightly justified that Interim dividends cannot be paid out of reserves.

Question 3.
Annual General Meeting (AGM) is crucial for Final Dividend.
OR
The final Dividend is declared only after the accounts are prepared and finalized.
Answer:

• The final dividend is that dividend that is declared and paid after the closing of the financial year.
• It is decided and recommended by the Board of Directors.
• The rate of final dividend is declared by the shareholders in the AGM.
• It is declared only after the account of the year is prepared and finalized.
• Thus, it is rightly said that AGM is crucial for the Final Dividend. OR Final Dividend is declared only after the accounts are prepared and finalized.
• The final dividend is declared from different sources, and its declaration does not need the authorization of articles.
• Thus, it is rightly said that AGM is crucial for the Final Dividend. OR Final Dividend is declared only after the accounts are prepared and finalized.

Question 4.
Listed Company has to follow additional guidelines on dividend matters.
Answer:

• Notify stock exchange where company’s securities are listed at least 2 (two) days in advance of the date of the meeting of the Board at which recommendation of final dividend is to be considered.
• Intimate Stock Exchange immediately about the declaration of the dividend after the Board Meeting.
• Give notice of Book closure to the stock exchange at least 7(seven) working days before the closure.
• Close the Register of members and the Transfer Register.
• It must use an electronic mode of payment such as Electronic Clearing Services (ECS) or National Electronic Fund Transfer (NEFT); as approved by the Reserve Bank of India (RBI)
• The listed company has to express the dividend on a per-share basis only.

Question 5.
Equity shareholders get the last priority in receiving dividends.
Answer:

• The dividend is the portion of profits of the company paid to its shareholders.
• The dividend is payable only to the registered shareholders of the company.
• Preference shareholders are entitled to the dividend before it is paid to the equity shareholders.
• The equity shares do not enjoy a preference for dividends.
• They do not have priority for the payment of capital at the time of liquidation.
• Equity shareholders will get dividends from residual profit i.e. after paying to preference shareholders and arrears of dividend on cumulative preference shares.
• The equity shares get the last priority in dividends and thus are the residual claimants.
• Thus, it is rightly said that the equity shareholders get the last priority in receiving dividends.

Question 6.
Unpaid dividends cannot be used by the company.
Answer:

• The dividend declared by the company but has not been paid to or claimed by a shareholder within 30 days of its declaration is termed as an unpaid dividend.
• The total amount of dividend which remains unpaid should be transferred to ‘Unpaid Dividend Account’.
• Any amount in the Unpaid Dividend Account of a Company that remains unpaid/unclaimed for a period of 7 years will be transferred to ‘Investors Education and Protection Fund’.
• The company cannot use unpaid dividends. The only claimant of money can claim for it by following certain procedures.
• Thus, it is rightly said that unpaid dividends cannot be used by the company.

Question 7.
Interest is a liability/obligation of the company.
OR
Interest is paid to the creditor of the company.
Answer:

• Interest is a payment made for using another money So it is the cost of renting the money for the borrower and it is the income from lending money for the lender.
• The company has to pay interest, if it has borrowed money from creditors like Debenture holders, Depositors, Bondholders, etc.
• Interest is the liability of the company as it is a payment made for using money from the lender.
• Interest is a charge against the profit of the company.
• Even if, the company makes no profit, it has to pay interest to borrowers.
• Thus, it is rightly said that interest is a liability/ obligation for the company.

Question 8.
Approval of members is not needed for Interim Dividends.
Answer:

• Dividend declared by the Board of Directors between two Annual General Meetings is called Interim Dividend.
• It is paid in the middle of the accounting year.
• It is declared out of profits of the current account year.
• It is declared before the preparation of final accounts of the company.
• The Board of Directors has the power to declare Interim Dividend.
• Articles of Association’ of the Company must authorize the Board of Directors to declare an interim dividend.
• The Board Meeting has to pass a resolution for declaring the Interim dividend.
• Thus, it is rightly said that approval of members is not needed for Interim dividends.

7. Answer the following questions.

Question 1.
Define Dividend and explain its features.
Answer:
The term dividend is derived from the Latin word ‘Dividendum’ which means that which is to be divided. A dividend is the portion of the company’s earnings distributed to the shareholders decided and managed by the company’s board of directors.
The dividend is a share of distributable profits of the company. A shareholder is entitled to receive the dividend when it is formally declared by the company.
Definitions:

• The Institute of Chartered Accountants of India has defined Dividend “as a distribution to shareholders out of profits or reserves available for this purpose”.
• The Supreme Court has defined it as “In case of going – concern, it means the portion of profits of a company, which is allotted to the holders of shares in a company”.

Features of Dividend:

• It is the portion of profits of the company paid to its shareholders.
• It is payable out of profits of the company.
• It is an unconditional payment made by the company.
• The company pays dividends to the equity shareholders and preference shareholders only.
• If the company has issued equity shares with differential rights as to dividend, the terms of issue of such shares will govern the rights of shareholders about receiving the dividend.
• A dividend cannot be declared out of capital.
• Recommendation of the Board of Directors is necessary for the declaration of dividends.
• The dividend is recommended and approved by the Board of Directors by passing a resolution at the Annual General Meeting.
• The previous year’s dividend cannot be declared if that particular year’s Annual Account has been approved in the AGM.
• Dividend once approved and declared by shareholders, creates a debt. It cannot be revoked.
• The dividend includes the interim dividend.
• The dividend must be paid in cash, cheque or transferred through ECS or NEFT and not in kind.
• The dividend is to be paid on the paid-up value of shares.
• Dividend cannot be paid on calls paid in advance.

Question 2.
What is Interest? Explain its features.
Answer:
Interest is the cost of borrowing money typically expressed as an annual percentage of a loan. The money people earn on their savings is called Interest. Interest is paid to the lender by the borrower in case of a loan or from the financial institution to the depositor in the case of a savings account. In financial terms, it is a payment made for using the money of another i.e. borrower takes money from the lender. Interest is the cost of renting the money for the borrower and it is the income from lending money for the lender.
Features:

• Interest is the price paid for the productive services rendered by capital.
• Interest has a direct relation with risk. The higher the risk, the higher is the interest.
• The rate of interest is expressed as an annual percentage of the principal.
• The rate of Interest is determined by various factors like money supply, fiscal policy, the volume of borrowings, rate of inflation, etc.
• Interest is a charge against the profit of the Company. Even if the company makes no profit, interest should be paid.
• The rate of interest is fixed and pre-determined.

Question 3.
Discuss legal provisions for declaration of dividend.
Answer:
The term dividend is derived from the Latin word ‘Dividendum’ which means that which is to be divided.
A dividend means the profit of a company that is not retained in Legal Provisions for declaration of Dividend.
(i) Board Meeting:

• The Board of Directors has the power and authority to declare the dividend.
• The board meeting is called to pass a resolution to discuss the following points.
• Rate of Dividend and amount of Dividend to be paid.
• Book closure date for dividend.
• Date of Annual General Meeting.
• Bank with which a separate account should be opened to remit the dividend amount.

(ii) Shareholders’ Approval:

• The dividend is approved by shareholders by passing an Ordinary Resolution at the Annual General Meeting.
• Shareholders can declare a lower rate of dividend than what is recommended by the Board but not higher than that.
• Once the dividend is declared at the General Meeting, it cannot be canceled. Hence, the company cannot declare dividends for the second time in that year.

(iii) Separate Bank Account:
The company must deposit the dividend amount in a separate bank account i.e. “Dividend Account” opened in a scheduled bank. The dividend must be transferred to this account within 5 days of its declaration.

(iv) Prohibition to pay Dividend:

• A company cannot declare any dividend on equity shares if the company has failed to repay the deposit or any interest on the deposit.
• If the company is found guilty at the time of Payment of Interest to debenture holders, Redemption of Debentures and Preference Shares, Payment of Interest to a financial institution, etc. in that case no dividend can be declared.

Question 4.
Explain Interim Dividend.
Answer:

• The interim dividend is the dividend that is declared and paid in the middle of an accounting year i.e. before the finalization of accounts for the year. Dividend declared by the Board of Directors between two Annual General Meetings is called Interim Dividend.
• The interim dividend is paid in the middle of the accounting year.
• The interim dividend is declared by the Board of directors during any financial year out of surplus in the profit and loss account and out of profits of the financial year.

Features of Interim Dividend:

• The Board of Directors has the power to declare an interim dividend.
• Interim Dividend is only payment on account of the whole dividend for the year.
• The company should provide depreciation for the entire year and not for a part of the year before declaring an interim dividend.
• Interim dividends cannot be paid out of any reserves.
• The Board of directors can declare interim dividend only when it is mentioned in the Articles of Association of the Company.
• A resolution has to be passed in the Board Meeting for declaring the Interim Dividend.
• A separate Bank account should be maintained in a scheduled bank to credit the interim dividend within 5 (five) days of its declaration.
• Interim Dividend should be paid within 30 days of its declaration.
• Unpaid/Unclaimed dividend should be transferred to ‘Unpaid Dividend Account’ within 7 days of the expiry of 30 days of declaration i.e. 37 days of its declaration.
• Any amount remaining Unpaid/Unclaimed in the ‘Unpaid Dividend Account’ for 7 (seven) years should be transferred to IEPF.

Balbharti Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 9 Depository System Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 9 Depository System

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
In physical mode, securities are held in ____________ form.
(a) Paper
(b) Dematerialization
(c) Electronic
Answer:
(a) Paper

Question 2.
Risk of losing certificates exist in ____________ mode.
(a) Physical
(b) Dematerialization
(c) Digital
Answer:
(a) Physical

Question 3.
In Depository system, securities are held in ____________ form.
(a) Scrip based
(b) Electronic
(c) Physical
Answer:
(b) Electronic

Question 4.
____________ is the institute which facilitates electronic holding of securities.
(a) Depository Participant
(b) Issuer
(c) Depository
Answer:
(c) Depository

Question 5.
There is no payment of ____________ when securities are demated.
(a) Octroi
(b) Wealth Tax
(c) Stamp Duty
Answer:
(c) Stamp Duty

Question 6.
Depository Act was passed in ____________
(a) 1919
(b) 1996
(c) 1999
Answer:
(b) 1996

Question 7.
India has a ____________ depository system.
(a) Sole
(b) Multi
(c) Single
Answer:
(b) Multi

Question 8.
____________ is a constituent of depository system.
(a) Government
(b) Issuer
(c) Trust
Answer:
(b) Issuer

Question 9.
____________ is the oldest depository in India.
(a) Dow Jones
(b) NSDL
(c) CDSL
Answer:
(b) NSDL

Question 10.
Demat account is opened by ____________
(a) Beneficial owner
(b) CDSL
(c) SEBI
Answer:
(a) Beneficial owner

Question 11.
Demated shares are ____________
(a) Non-transferable
(b) Fungible
(c) Bearer
Answer:
(b) Fungible

Question 12.
____________ is a unique code given to a security.
(a) IBM
(b) BBM
(c) ISIN
Answer:
(c) ISIN

Question 13.
In India ISIN for corporate securities is allotted by ____________
(a) NSDL
(b) Central Government
(c) State Government
Answer:
(a) NSDL

Question 14.
____________ has to apply for ISIN.
(a) Company
(b) Depository Participant
(c) Depositors
Answer:
(a) Company

Question 15.
____________ has to pay charges to maintain Demat Account.
(a) Investor
(b) Issuer
(c) Depositor
Answer:
(a) Investor

Question 16.
NSDL is promoted by ____________
(a) NSE
(b) BSE
(c) FTSE
Answer:
(a) NSE

Question 17.
CDSL is promoted by ____________
(a) NSE
(b) BSE
(c) FTSE
Answer:
(b) BSE

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Bad delivery	(1) 1956
(b) Depository Act	(2) A 12 digits number code
(c) ISIN	(3) Connects Government and Bank
(d) Depository Participant	(4) Second Depository in India
(e) CDSL	(5) The issuer company
(f) Depository	(6) Problem faced in physical mode
(g) Beneficial owner	(7) A 10 digits number/code
	(8) Connect depository and investor
	(9) First depository in the world
	(10) Custodian of securities in electronic form
	(11) Problem faced in electronic mode
	(12) 1996
	(13) Government organization
	(14) The investor

Answer:

Group ‘A’	Group ‘B’
(a) Bad delivery	(6) Problem faced in physical mode
(b) Depository Act	(12) 1996
(c) ISIN	(2) A 12 digits number code
(d) Depository Participant	(8) Connect depository and investor
(e) CDSL	(4) Second Depository in India
(f) Depository	(10) Custodian of securities in electronic form
(g) Beneficial owner	(14) The investor

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
This mode of holding securities may result in loss and theft of certificates.
Answer:
Physical mode of securities

Question 2.
The organization holds the securities in electronic mode.
Answer:
Depository

Question 3.
This system eliminates storing of certificates.
Answer:
Depository system

Question 4.
This system allows faster and easier transfer of securities.
Answer:
Depository system

Question 5.
The oldest Depository of India.
Answer:
NSDL (National Security Depository limited)

Question 6.
The country where the Depository system started for the first time.
Answer:
Germany

Question 7.
The registered owner of securities.
Answer:
Beneficial Owner

Question 8.
The agent of the Depository.
Answer:
Depository Participant

Question 9.
This process converts securities into an electronic form from a physical form.
Answer:
Dematerialization

Question 10.
This process converts securities into physical form from electronic form.
Answer:
Rematerialization

Question 11.
This means securities are without distinctive identity numbers.
Answer:
Fungibility

Question 12.
This is the unique code for security given in the Depository system.
Answer:
International Securities Identification Number

1D. State whether the following statements are true or false.

Question 1.
The physical mode of holding Securities is risky.
Answer:
True

Question 2.
Allotment of Securities takes a longer time when in physical mode.
Answer:
True

Question 3.
Transfer of Securities is easier in electronic mode.
Answer:
True

Question 4.
Bad delivery is likely in the Depository system.
Answer:
False

Question 5.
The depository system began in the USA for the first time in the world.
Answer:
False

Question 6.
India has a multi-depository system.
Answer:
True

Question 7.
The depository system is very similar to the banking system.
Answer:
True

Question 8.
DP is a constituent of the Depository system.
Answer:
True

Question 9.
DP is an Agent of the Depository.
Answer:
True

Question 10.
A bank can work as a DP.
Answer:
True

Question 11.
DRF is required for conversion from physical to electronic.
Answer:
True

Question 12.
ISIN is a unique code given to the specific Securities.
Answer:
True

1E. Find the odd one.

Question 1.
Elimination of storage of certificates, theft of certificates, torn certificates
Answer:
Elimination of storage of certificates

Question 2.
NSDL, CDSL, NBFC
Answer:
NBFC

Question 3.
Depository, DP, RBI
Answer:
RBI

Question 4.
DP, BO, State Government
Answer:
State government

Question 5.
Issuer, BO, Central Government
Answer:
Central government

Question 6.
DRF, RRF, PPF
Answer:
PPF

1F. Complete the sentences.

Question 1.
Central location for keeping Securities in demated form is ____________
Answer:
Depository

Question 2.
Freezing of debit/credit of Securities is possible in ____________
Answer:
Dematerialized Securities

Question 3.
First Depository of the world started in the year ____________
Answer:
1947

Question 4.
The Indian Depository Act was passed in the year ____________
Answer:
1996

Question 5.
Link between Depository and investor is ____________
Answer:
Depository participant

Question 6.
Account of Securities of the investor is maintained by ____________
Answer:
Depository Participant

Question 7.
The process which converts physical Securities in electronic form is ____________
Answer:
Dematerialization

Question 8.
The process which converts digital Securities in physical form is ____________
Answer:
Rematerialization

Question 9.
The issuer company must register with ____________
Answer:
Depository

Question 10.
The unique code identifying a security is ____________
Answer:
(ISIN) International Securities Identification Number

Question 11.
The first Depository of India is ____________
Answer:
NSDL (National Security Depository Limited)

1G. Select the correct option from the bracket.

Question (I).

Group ‘A’	Group ‘B’
(a) Dematerialization	(1) ………………..
(b) ……………………..	(2) DP
(c) First Depository of world	(3) …………………
(d) CDSL	(4) ………………..

(1999, Agent of Depository, Germany, Physical to electronic)
Answer:

Group ‘A’	Group ‘B’
(a) Dematerialization	(1) Physical to Electronic
(b) Agent of Depository	(2) DP
(c) First Depository of world	(3) Germany
(d) CDSL	(4) 1999

Question (II).

Group ‘A’	Group ‘B’
(a) First Depository in India	(1) …………………………
(b) ……………………..	(2) Rematerialisation
(c) Fungibility	(3) …………………………
(d) ……………………	(4) ISIN

(12 digital code, NSDL, Electronic to physical, No distinctive number)
Answer:

Group ‘A’	Group ‘B’
(a) First Depository in India	(1) NSDL
(b) Electronic to Physical	(2) Rematerialisation
(c) Fungibility	(3) No distinctive number
(d) 12 digital code	(4) ISIN

1H. Answer in one sentence.

Question 1.
What is the Depository system?
Answer:
A depository system is a system where Securities are held in electronic form.

Question 2.
Give examples of actions termed as corporate action.
Answer:
Payment of dividend, issue of Bonus Shares, offering of right Shares, Early Redemption of Debentures, Mergers and Acquisitions, etc.

Question 3.
When was Depository Act passed in India?
Answer:
Depository Act was passed in India in the year 1996.

Question 4.
What is a DP?
Answer:
DP means Depository participant, who is an agent of Depository.

Question 5.
What is Dematerialisation?
Answer:
Dematerialization is the process of converting physical Securities into electronic.

Question 6.
What is Rematerialization?
Answer:
Rematerialization is the process of converting electronic Securities into physical.

Question 7.
What is ISIN?
Answer:
ISIN is the unique code given to the specific Securities of the company. ISIN refers to ‘International Securities Identification Number’.

Question 8.
Name the Depositories in India?
Answer:

• National Security Depository Limited (NSDL)
• Central Depository Services Limited (CDSL)

1I. Correct the underlined words and rewrite the following sentences.

Question 1.
The electronic mode of holding Securities is risky.
Answer:
The physical mode of holding Securities is risky.

Question 2.
Allotment and Transfer of Securities are time-consuming in electronic mode.
Answer:
Allotment and Transfer of Securities are time-consuming in physical mode.

Question 3.
Banking system leads to a script less capital market.
Answer:
Depository system leads to a scriptless capital market.

Question 4.
Storage of certificates is not required in the physical mode of holding.
Answer:
Storage of certificates is not required in the electronic mode of holding.

Question 5.
India has a single Depository system.
Answer:
India has a multi Depository system.

Question 6.
Depository participant in India has to register under the Partnership Act.
Answer:
Depository participant in India has to register under the Depository Act.

Question 7.
Demat accounts are opened and maintained by the Depository.
Answer:
Demat accounts are opened and maintained by the Depository Participant.

Question 8.
Securities are fungible in physical mode.
Answer:
Securities are fungible in electronic mode.

Question 9.
ISIN is a code given to a company.
Answer:
ISIN is a code given to the security of a company.

Question 10.
ISIN of Indian government Securities is issued by NSDL.
Answer:
ISIN of Indian government Securities is issued by RBI.

1J. Arrange in proper order.

Question 1.
(a) Gets statement of Account
(b) Open Demat Account
(c) Submit DRF
Answer:
(a) Submit DRF
(b) Open Demat Account
(c) Gets statement of Account

Question 2.
(a) Investor (BO) submits an application for Securities to the issuer company
(b) Depository intimates the DP about crediting Bo’s Account
(c) Issuer company gives details of allotment to Depository.
Answer:
(a) Investor (BO) submits an application for Securities to the issuer company
(b) Issuer company gives details of allotment to Depository
(c) Issuer company gives details of allotment to Depository

2. Explain the following terms/concepts.

Question 1.
Depository System
Answer:

• In the Depository system, securities are held in electronic form.
• The transfer and settlement of securities are done electronically.
• The Depository System maintains accounts of the shareholder, enables transfer, collects dividends, bonus shares, etc. on behalf of the shareholder.
• This system is also called a scriptless trading system.
• It keeps the securities safe. It offers scope for paperless trading by using state-of-art technology.

Question 2.
Dematerialization
Answer:

• Dematerialization is a process whereby a client can get physical certificates converted into electronic mode.
• For this client has to surrender the certificates along with the Demat Request Form (DRF) to the DP.

Question 3.
Rematerialization

• Rematerialization is the process whereby a client can get his electronic holdings of securities converted into physical certificates.
• For this client has to give a written request in the form of Remat Request Form (RRF) to the DP.

Question 4.
Fungibility
Answer:

• Fungibility means the state of being interchangeable. Securities issued by the same company of the same class have the same value no matter who owns them.
• The securities held in electronic form are fungible which means they don’t have distinctive numbers.

Question 5.
ISIN
Answer:

• ISIN is a standard numbering system that is accepted globally.
• ISIN consists of a 12 (twelve) digit alpha-numeric code which is divided into 3 (Three) parts.
• The company has to apply for ISIN for its securities with documents like a prospectus.

3. Study the following case/situation and express your opinion.

1. Mr. Z holds 100 shares of peculiar Co. Ltd. In physical mode and wishes to convert the same in electronic mode:

Question (a).
Mr. Z holds a savings bank account with CFDH Bank Ltd. Can he deposit his shares in this account for Demat?
Answer:
No. He can’t, as it is a savings bank account.

Question (b).
What type of account is needed for the same?
Answer:
For holding electronic securities, he needs to open a Demat A/c with the Depository Participant (DP).

Question (c).
Is it the RBI that will be the custodian of shares of Mr. Z after demating?
Answer:
No. RBI won’t be the custodian. After demating concerned ‘Depository’ (NSDL/CDSL) will be the custodian of the shares of Mr. Z.

2. Mr. R holds 100 shares of Peculiar Co. Ltd. In Demat mode.

Question (a).
He wants to transfer one share each to his wife, daughter, and son. Can he do so?
Answer:
Yes, Mr. R can do so, as under dematerialized securities market lot is of one share.

Question (b).
Does he need to submit DRF or DIS if he wants to transfer his shares?
Answer:
He needs to submit DIS (Delivery Instruction Slip) if he wants to transfer his shares.

Question (c).
Can he nominate his wife in his Demat account?
Answer:
Yes. Mr. R can nominate his wife for the Demat account.

3. Mrs. Z wishes to open a Demat account in her name.

Question (a).
Can she open the account going to the Mumbai office of NSDL?
Answer:
No, Mrs. 2 cannot go directly to the Mumbai office of NSDL.

Question (b).
Is she required to pay for the opening of the account and its maintenance?
Answer:
Yes, she is required to pay for the opening of the account and its maintenance.

Question (c).
Does she have to send the shares to the respective company for demating?
Answer:
Yes, she has to send her original share certificate through Depository Participant to the company.

4. Mr. L wants to demat his 25 shares of Peculiar Co. Ltd bearing certificate no 100 and distinctive no 76-100.

Question (a).
Which form is he required to fill as a written request to the DP?
Answer:
Mr. L is required to fill Demat Request Form (DRF) as a written request to DP.

Question (b).
Does he have to fill instrument of transfer if he wishes to transfer the same after demat?
Answer:
No, he needs to fill instrument of transfer after opening Demat A/c.

Question (c).
Does he have to quote certificate no. and distinctive no. if he wishes to transfer his shares after it is in Demat form?
Answer:
No, Mr. L need not quote certificate no. and distinctive no. if he wishes to transfer his shares after it is in Demat form.

5. Mr. S. holds 50 shares of Peculiar Co. Ltd in Demat form. The company has declared a dividend of Rs 5. Per-share and Bonus of 1 : 1 to its shareholders.

Question (a).
How will Mr. S get his dividend?
Answer:
Mr. S will get his dividend credited directly to his Demat A/c.

Question (b).
Will he get a Bonus share in Physical or Demat?
Answer:
He will get Bonus Share in his Demat A/c.

Question (c).
Who is entitled to dividend and Bonus: Mr. S or the depository? (NSDL in this case).
Answer:
Mr. S is entitled to dividends and Bonuses through the depository services.

4. Distinguish between the following.

Question 1.
Dematerialization and Rematerialization.
Answer:

Points	Dematerialization	Rematerialization
1. Meaning	Conversion of physical securities into electronic form is known as ‘Dematerialization’	Conversion of electronic securities into physical form is known as ‘Rematerialization’
2. Conversion	Securities in physical/paper form are converted into electronic form	The electronic form of securities are converted into physical form
3. Form Used	‘Demat Request Form (DRF) is submitted by the investor to the DP	‘Remat Request Form’ (RRF) is submitted by the investor to the DP
4. Process	It is an initial process	It is a reverse process
5. Function/Sequence	It is a primary and principal function of the depository	It is a secondary and supporting function of the depository
6. Distinctive numbers	Demat securities have no distinctive numbers	Remat securities will have certificates and distinctive numbers issued by the company
7. Securities Maintenance Authority	The depository is the custodian of securities and records	The issuing company keeps the record. The investor also maintains the record
8. Time Consumed	It is an easy and time-saving process	It is a complex and time-consuming process

5. Answer in brief.

Question 1.
Explain the disadvantages of the physical mode of holding securities.
Answer:
Securities mean shares, debentures, bonds, units of mutual funds, securities are held in physical form or paper form. Following are the problems/disadvantages of holding the securities in electronic form:
(i) Risk factor:
Paper certificates can be lost, damaged, torn, stolen, or misplaced during transit, etc.

(ii) Efforts in Duplicating:
If the original certificate is lost it becomes difficult to obtain duplicate certificates. It consumes time, effort, and money.

(iii) Delay in the allotment:
Allotment of new securities in physical form requires a longer time.

(iv) Delay in Transfer and Transmission:
Handling and recording physical certificates take a lot of time in the transfer and transmission of securities.

(v) Risk of Bad Delivery:
Buying and selling securities can create problems if the certificates are torn, forged, etc.

Question 2.
Explain any four advantages of the Depository system to investors.
Answer:
Investor refers to the Beneficial Owner, the one who invests in the company’s securities.
Advantages of Depository System to the Investor are as follows:
(i) No Risk:
Risks related to physical certificates like delays, loss of certificates, theft, mutilation, bad deliveries, etc. are totally eliminated.

(ii) Safety of Investment:
The safest and secure way of holding securities is in the form of DEMAT. It is controlled under Depositories Act and monitored by SEBI. For e.g. If we don’t want to deal in securities, for the time being, we can freeze the account instructing DP to avoid unexpected debit or credit.

(iii) Easy Transfer of Shares:

• There is no need of filling transfer form and submitting documents.
• Stamp duty is not applicable in this process.
• Cash realization and security transfer take place very fast.

(iv) Updated information:
The investor receives updated information about his transactions and holdings from DP and also sometimes from Depository.

(v) Loan against securities:
An investor can raise a loan from the banks against the security of Dematerialized securities.

(vi) No ‘Lots’:
The lot system has been abolished. The market lot is one share for dematerialized securities.

(vii) Nomination Facility:
Nomination Facility is allowed under the Depository system. In the event of the death of the investor, the process becomes simple.

(viii) Automatic Credit:
The investor’s account is automatically credited or debited by the company. This is called ‘Corporate Action.’
For e.g. Payment of dividend, Bonus Issue, Right Issue, Redemption, etc.

Question 3.
Explain any four advantages of the Depository system to the company.
Answer:
Benefits/Advantages of Depository System:
(A) Investors:
(i) Safety:
A safe and secure way of holding securities is in electronic form/mode. The depository system is monitored by SEBI. The Investor can keep his account in a ‘Freeze/Lock’ mode to avoid/prevent unexpected debit or credit or both by giving instructions to the DP.

(ii) Easy Transfer of Shares:
These securities can be easily transferred in electronic mode. Filling out the transfer form and uploading the documents can be easily done online. It is a time and efforts saving process. No stamp duty is levied on the depository system.

(iii) Update and Intimation:
The investor can check his status of holding securities at any time. Depository Participant provides investors with his statement of accounts periodically.

(iv) Automatic Credit:
Under, the depository system the investor’s account is automatically credited/debited. This credit or debit of accounts is usually in case of Payment of Dividend, Issue of Bonus Shares, Offering of Rights Shares, Early Redemption of Debentures, Mergers, and Acquisitions, etc.

(B) Companies:
(i) Up-to-date Information:
The depository system enables the company to maintain the information of the investors holding. It also helps the company to keep updated information about its shareholding pattern. The company is able to know the particulars of beneficial owners and their holdings periodically.

(ii) Reduction in costs and efforts:
Due to the depository system, maintaining the documents physically, the printing of certificates has saved a lot of time and cost.

(iii) Better Relationships:
The transfer process under the depository system is prompt and free from defects. So, complaints against the company by an investor are avoided in this regard. This helps the company build a good corporate image.

(iv) International Investment:
Paperless trading is a boon for the company management as it provides better and quicker services to the investors staying within the country and abroad. This attracts investment from abroad.

Question 4.
Explain Depository as a constituent of Depository System.
Answer:

• The depository is a company registered under the Companies Act, to deal in securities.
• It holds the securities in electronic form.
• It is responsible for safeguarding the investor’s securities and preventing any manipulation of records and transactions.
• There is no direct access of investors with the Depository.
• It works as a link between the company and investors.
• Statement of accounts is provided to the investor periodically.

Question 5.
Explain DP as the constituent of the Depository System.
Answer:

• Depository Participant acts as a link between the Depository and the Investor. In other words, it is an agent of the depository.
• DP is registered under the SEBI Act. It enjoys rights and obligations as specified under SEBI Regulations of 1996.
• It is an intermediary appointed by Depository.
• DP directly deals with customers and sends a statement of accounts periodically.
• The DP has a unique number for identification.
• Banks, Financial Institutions, Stock Brokers, etc. can function as Depository Participants.
• Thus, it is rightly justified that DP is an important constituent of the Depository system.

6. Justify the following statements.

Question 1.
Electronic holding of securities is safer than physical holding.
Answer:

• Electronic holding of securities means holding the securities in dematerialized form.
• Conversion of physical certificates into electronic form is known as ‘Dematerialization’.
• Holding securities in electronic form eliminates a huge volume of paperwork.
• The use of technology facilitates paperless trading which eliminates storage and handling of certificates. It also helps in reducing costs and efforts.
• There is no risk of getting lost, damaged, torn, stolen, misplaced during transit, etc.
• Delay in transfer and allotment of securities is also avoided.
• Thus, it is rightly justified that, electronic holding of securities is safer than physical holding.

Question 2.
Depository provides easy and quicker transfer of shares.
Answer:

• Under the Depository system, securities are held in electronic form.
• Not only the transfer and settlement of securities are done electronically but it also maintains the accounts of the shareholder, collects dividends, bonus shares, etc. on behalf of the shareholder.
• Depository Participant acts as a link between the Depository and the Investor.
• No stamp duty is levied on the depository system.
• Processing time in the transfer of securities is reduced and neither the securities nor the cash is held up for an unnecessarily long time.
• Hence it is also called a “Scripless trading system”. Thus, it is rightly justified that the Depository provides easy and quicker transfer of shares.

Question 3.
Depository System results in reduced time, cost and efforts.
Answer:

• The depository System has a very important role to play in the successful functioning of the Capital market.
• Under Depository System, securities are held in electronic form.
• The transfer and settlement of securities are done electronically.
• The Depository system maintains accounts of the shareholder, enables transfer, collects dividends, bonus shares, etc. on behalf of the shareholder.
• It eliminates a huge volume of paperwork, storage, and handling of physical certificates.
• Thus, it is rightly justified that, Depository system results in reduced time, cost and efforts.

Question 4.
The depository system is very similar to the Banking system.
Answer:

• The depository system is similar to the Banking system in many aspects.
• Depository keeps the securities safe, just like the bank keeps the money of the account holder safe.
• In banks, funds are held in accounts having unique numbers. Similarly, securities are held in accounts having unique IDs.
• There is no physical handling of money in the bank. Similarly, there is no physical handling of securities by the depository.
• Bank facilitates the transfer of funds between accounts. Depository facilitates the transfer of securities between accounts.
• Thus, it is rightly justified that the Depository system is very similar to the Banking system.

Question 5.
DP is an important constituent of the Depository system.
Answer:

• Depository Participant acts as a link between the Depository and the Investor. In other words, it is an agent of the depository.
• DP is registered under the SEBI Act. It enjoys rights and obligations as specified under SEBI Regulations of 1996.
• It is an intermediary appointed by Depository.
• DP directly deals with customers and sends a statement of accounts periodically.
• The DP has a unique number for identification.
• Banks, Financial Institutions, Stock Brokers, etc. can function as Depository Participants.
• Thus, it is rightly justified that DP is an important constituent of the Depository system.

Question 6.
Depository system allows both: Physical to electronic and electronic to physical conversion.
Answer:

• Under the Depository system, physical certificates can be converted into electronic ones known as ‘Dematerialization’.
• Similarly, the conversion of electronic securities into physical certificates is known as ‘Rematerialization’.
• Due to Dematerialization transfer of securities takes place fast and transactions are also settled immediately. Whereas in Rematerialization, settlement of transactions in the physical system takes more time.
• In Rematerialization, storing and handling physical certificates is more time-consuming. Whereas in dematerialization, there is no handling of certificates.
• There are chances of certificates getting lost, damaged, torn, stolen, misplaced during transit, etc.
• In this technological world, Demat securities are more preferred over Rematerialized securities.
• Thus, it is rightly justified that the Depository system allows both: Physical to electronic and electronic to physical conversion.

Question 7.
ISIN is a necessary component of Demat.
Answer:

• International Securities Identification Number (ISIN) is a code that uniquely identifies a specific securities issue.
• ISINs are allotted by that country’s NNA (National Numbering Agency).
• ISIN is a standard numbering system that is accepted globally.
• The ISIN’s structure is currently defined by the International Organization of Standardization (ISO).
• ISIN consists of a 12 (twelve) digit alpha-numeric code which is divided into 3 (three) parts.
• The company has to apply for ISIN for its securities with documents like a prospectus.
• In India, issuing ISIN to securities is assigned by SEBI to NSDL (for Demat shares). SEBI works as NNA in India.
• Thus, from the above points, it is rightly justified that ISIN is a necessary component of Demat.

7. Answer the following.

Question 1.
What is Depository System? Explain its advantages?
Answer:
The depository system came into existence in the year 1996. It is a system where securities are held in electronic form. It also maintains accounts of the shareholder, enables transfer, collects dividends, bonus shares, etc. on behalf of the shareholder. In other words, it is also called a scriptless trading system.

Benefits/Advantages of Depository System:
(A) Investors:
(i) Safety:
A safe and secure way of holding securities is in electronic form/mode. The depository system is monitored by SEBI. The Investor can keep his account in a ‘Freeze/Lock’ mode to avoid/ prevent unexpected debit or credit or both by giving instructions to the DP.

(ii) Easy Transfer of Shares:
These securities can be easily transferred in electronic mode. Filling out transfer forms and uploading the documents can be easily done online. It is a time and efforts saving process. No stamp duty is levied on the depository system.

(iii) Update and Intimation:
The investor can check his status of holding securities at any time. Depository Participant provides investors with his statement of accounts periodically.

(iv) Automatic Credit:
Under, the depository system the investor’s account is automatically credited/debited. This credit or debit of accounts is usually in case of Payment of Dividend, Issue of Bonus Shares, Offering of Rights Shares, Early Redemption of Debentures, Mergers, and Acquisitions, etc.

(B) Companies:
(i) Up-to-date Information:
The depository system enables the company to maintain the information of the investors holding. It also helps the company to keep updated information about its shareholding pattern. The company is able to know the particulars of beneficial owners and their holdings periodically.

(ii) Reduction in costs and efforts:
Due to the depository system, maintaining the documents physically, the printing of certificates has saved a lot of time and cost.

(iii) Better Relationships:
The transfer process under the depository system is prompt and free from defects. So, complaints against the company by an investor is avoided in this regard. This helps the company build a good corporate image.

(iv) International Investment:
Paperless trading is a boon for the company management as it provides better and quicker services to the investors staying within the country and abroad. This attracts investment from abroad.

Question 2.
Explain the constituents of the depository system.
Answer:

(i) Depository:

• Depository is an organization or a system where securities/shares are held in electric form.
• Depository transfers securities/shares between accounts on the instruction of the account holders.
• Depository contacts the customer through a depository participant.
• Transfer of shares is made through mere computerized book-entry in the depository.
• This becomes possible because shares are dematerialized.
• Only those securities which are held in the form of the share certificate are one’s names can be dematerialized.
• At present, there are two depositories. They are:
  • National Securities Depository Limited (NSDL)
  • Central Depository Services Limited (CDSL).

(ii) Depository Participant:

• The depository participant is the representative of the depository.
• Depository participant acts as an intermediary between investors and depositories.
• The depository participants have an identity number for identification.
• It has to maintain accounts of securities of each investor.
• Depository participant gives intimation about holdings from time to time by sending a statement of holding.
• According to SEBI guidelines financial institutions, banks, and stockbrokers can act as depository participants.

(iii) Beneficial Owner:

• An investor is known as ‘Beneficial Owner’ on whose name Demat account is opened.
• He enjoys the rights and benefits of members such as getting dividends, getting bonus shares, to voting at meetings.
• He is allotted an account number where securities are held.

(iv) Issuer Company:

• It is a company that makes an issue of securities.
• It must get registered with the depository.