Question : Case Study 30
LMN Corporation is a conglomerate that has executed trades on a stock exchange. The company's management is preparing for the settlement process.
Question :
During the settlement process, what is transferred from the seller to the buyer?
Option 1: Ownership of shares
Option 2: Brokerage fees
Option 3: Dividends
Option 4: Trading orders
Correct Answer: Ownership of shares
Solution : The correct answer is (a) Ownership of shares
During the settlement process, what is transferred from the seller to the buyer is ownership of shares. The seller transfers ownership of the shares to the buyer, and these shares are moved from the seller's demat account to the buyer's demat account, completing the transaction. Brokerage fees , dividends , and trading orders are not transferred from the seller to the buyer during the settlement process. Brokerage fees are fees paid to the broker, dividends are paid by the company to shareholders, and trading orders are instructions for buying or selling securities.
What does the settlement process involve after LMN Corporation executes trades on the stock exchange?
Option 1: Selecting a broker
Option 2: Matching buy and sell orders
Option 3: Transferring ownership and funds
Option 4: Opening a demat account
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