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Securities Contracts Act 1956 Definition of Securities

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Securities Contracts Act 1956 Definition of Securities

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Questions and Answers

According to the Securities Contracts (Regulation) Act, 1956, which of the following is NOT included in the definition of securities?

Debentures issued by a pooled investment vehicle

Shares of an incorporated company

Unit-linked insurance policy (correct)

Units issued by a mutual fund scheme

In the context of the Securities Contracts (Regulation) Act, 1956, what type of instruments are explicitly mentioned as derivatives?

Commodity derivatives only

Instruments derived from underlying securities only

Loans whether secured or unsecured only

All of the above (correct)

Which type of entity can issue units or instruments that are considered securities under the Securities Contracts (Regulation) Act, 1956?

Only incorporated companies

Individual investors

Any form of legal entity

Pooled investment vehicles or collective investment schemes (correct)

Under the Securities Contracts (Regulation) Act, 1956, what kind of contracts can be classified as derivatives?

Contracts based on prices of underlying securities, among others Signup and view all the answers

As per the Securities Contracts (Regulation) Act, 1956, what is the distinctive feature of a security receipt?

It acknowledges beneficial interest in a debt or receivable Signup and view all the answers

What do securities represent?

Terms of exchange of money between two parties Signup and view all the answers

Which of the following entities can issue a certificate or instrument acknowledging beneficial interest in a debt or receivable?

A pooled investment vehicle Signup and view all the answers

Why do companies, financial institutions, or the government issue securities?

To raise money at a reasonable cost Signup and view all the answers

What is the main purpose of listing securities on a stock exchange?

To ensure the security is liquid and provides information to investors Signup and view all the answers

How are equity and debt securities broadly classified?

Based on risk and return characteristics Signup and view all the answers

What do rights represented by securities involve?

Ownership, participation in management, or claims on assets Signup and view all the answers

What do risk and return refer to in the context of securities?

Risk refers to the possibility of loss, while return refers to the benefits investors will receive Signup and view all the answers