Question : Case Study 76
DEF Enterprises is a startup planning to trade its shares on a stock exchange. The company's management is considering the importance of opening a demat account.
Question :
What is a demat account used to hold in electronic form?
Option 1: Physical share certificates
Option 2: Gold and silver coins
Option 3: Cash and currency notes
Option 4: Securities and investments
Correct Answer: Securities and investments
Solution : The correct answer is (d) Securities and investments
A demat account is used to hold securities and investments in electronic form. These securities can include stocks, bonds, mutual funds, government securities, Exchange Traded Funds (ETFs), and other financial instruments. Opening a demat account allows investors to hold, track, and manage their investment holdings digitally, making it convenient for trading and investment activities. The demat account replaces the need for physical share certificates, converting them into electronic records and providing a secure way to hold various securities.
What is the primary benefit of opening a demat account for trading securities?
Option 1: Higher dividend payouts
Option 2: Reduced risk of fraud
Option 3: Access to insider information
Option 4: Lower income tax rates
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