Question : Case Study 31
PQR Ltd. is a well-known company that has executed trades on a stock exchange. The company is now focusing on the dematerialization process.
Question :
What is the main benefit of dematerialization for PQR Ltd.?
Option 1: Reducing brokerage fees
Option 2: Increasing dividends
Option 3: Facilitating trading
Option 4: Enhancing voting rights
Correct Answer: Facilitating trading
Solution : The correct answer is (c) Facilitating trading
The main benefit of dematerialization for PQR Ltd. is facilitating trading. Dematerialization simplifies the process of trading shares as electronic shares held in a demat account can be easily and quickly bought, sold, and transferred. It eliminates the need for physical share certificates, making transactions more efficient and convenient for both the company and investors.
While reducing brokerage fees can be a potential benefit of efficient trading, it's not the primary benefit of dematerialization. Dematerialization does not directly affect dividends or voting rights . Voting rights are associated with the ownership of shares, which is not altered by dematerialization. Dividends are distributed based on share ownership, and dematerialization doesn't influence this distribution.
What process is PQR Ltd. engaged in, where physical share certificates are converted into electronic form?
Option 1: Trading procedure
Option 2: Dematerialization
Option 3: Placing an order
Option 4: Selecting brokers
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile