Nigerian Stock Exchange - JSS3 Social studies Past Questions and Answers - page 2
Which regulatory body oversees securities laws?
FCC
SEC
FDA
Why do individuals buy shares in a company?
To own a portion of the company
To become an employee of the company
To borrow money from the company
What is the primary function of securities in terms of companies?
To decrease shareholder value
To raise capital
To discourage investment
How does the NSE contribute to maintaining fair markets?
By promoting market volatility
By overseeing and enforcing rules
By encouraging market manipulation
Explain in your own words the role of the Securities and Exchange Commission (SEC).
The Securities and Exchange Commission (SEC) is a regulatory body responsible for overseeing and enforcing securities laws to protect investors, ensure fair markets, and support capital formation.
What does it mean to own a share in a company, and how does it benefit the shareholder?
Owning a share in a company means having ownership in that company. Shareholders benefit by having the right to a portion of the company's profits and potentially participating in decision-making through voting rights.
How does the Nigerian Stock Exchange (NSE) contribute to market facilitation, and why is this important?
The NSE facilitates market activities by providing a platform for buying and selling securities, ensuring fair and transparent transactions. This is crucial for maintaining market efficiency and fostering investor confidence.
Elaborate on the ways in which securities, such as stocks and bonds, contribute to investment and risk management.
Securities offer avenues for investment, allowing individuals to potentially earn returns. Moreover, they enable risk diversification by spreading investments across different assets, reducing the impact of individual asset volatility.
How does the NSE contribute to the process of capital formation, and why is it essential for companies?
The NSE facilitates capital formation by allowing companies to issue new shares, raising funds for various purposes like expansion and projects. This is crucial for companies to grow and thrive in the market.
In your understanding, why is liquidity important in the context of securities, and how does it benefit investors?
Liquidity is vital as it allows securities to be easily bought or sold in the market. This benefit provides investors with flexibility, enabling them to enter or exit positions more efficiently, contributing to a more dynamic and responsive market.