Question : Case Study 86
JKL Enterprises is a well-known company with its shares listed on a stock exchange. The company's management is reviewing the concept of opening a demat account.
Question :
What is the primary advantage of holding securities in a demat account?
Option 1: Higher dividend payouts
Option 2: Reduced risk of fraud
Option 3: Increased voting rights
Option 4: Lower income tax rates
Correct Answer:
Reduced risk of fraud
Solution : The correct answer is (b) Reduced risk of fraud
The primary advantage of holding securities in a demat account is the "reduced risk of fraud." Demat accounts hold securities in an electronic, dematerialized form, eliminating the risks associated with holding physical share certificates. With electronic records and a secure system in place, the risk of theft, forgery, loss, or other fraudulent activities often associated with paper-based securities is significantly reduced, providing a more secure and efficient way to hold and trade securities. While holding securities in a demat account offers other benefits such as ease of access and convenience, reducing the risk of fraud is a key advantage.
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