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 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
Correct Answer: Dematerialization
Solution : The correct answer is (b) Dematerialization
Dematerialization is the process of converting physical share certificates into an electronic or digital format, which can be held in a dematerialized or demat account. This electronic format makes it easier to trade and manage shares in the modern financial system. The shares are no longer in physical certificate form but are represented digitally, simplifying transactions and reducing the risk associated with physical certificates.
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
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