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The allocative… (Class 12 Business Studies SQP 2023-24, Q7)

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Business StudiesCBSE Class 12 · Sample paper, session 2023-24 · 1 mark · MCQ

CBSE Class 12 Business Studies sample paper 2023-24: question 7

From the official CBSE sample question paper for 2023-24, section A, question 7, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q7 · 1 mark · MCQFinancial Markets

The allocative function of Financial market helps in ________

  1. (A)Bringing transparency in trading procedure
  2. (B)Earning higher rate of return to household sector
  3. (C)Better functioning of depository
  4. (D)Determining the prices of securities

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Whose savings does a financial market allocate?

Hint 2

Price determination is a separate function.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. The allocative function of a financial market channels household savings into the most productive investment uses.

  2. Because funds go to the most productive uses, the household sector earns a higher rate of return on its savings. Option (B).

    1 mark

Answer: (B) Earning higher rate of return to household sector

Where the marks are

  • Savings to productive uses (1 mark)

Revise the chapter

  • Chapter: Financial Markets (notes, formulas, where marks are lost and every past question)
Practise this chapterBoard-style questions from Financial Markets, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.