12th Standard Commerce — Stock Exchange Online Test
Chapter 7 of Class 12 Commerce explains the stock exchange: its origin in Amsterdam in 1602, definitions, functions, features, benefits and limitations, the 24 stock exchanges in India, brokers, jobbers and remisers, bull, bear, stag and lame duck speculators, the commodity exchange contrast, and NSE, SHCIL, STCI, NSDL, Nifty and Sensex.
Study this chapter
About Stock Exchange
Medium ~50 min study
Stock Exchange is the seventh chapter of the Tamil Nadu State Board Class 12 (Plus Two) Commerce book and the first in Unit 3, Financial Markets II. It shows how a stock exchange gives investors a ready market for existing securities and helps companies and governments raise capital.
The lesson traces the stock exchange from the Amsterdam Bourse to the Bombay Stock Exchange, gives the definitions of Husband and Dockerary and of the Securities Contracts (Regulation) Act, 1956, and then lists the functions, features, benefits and limitations. It closes with traders and speculators, a comparison with commodity exchanges, and recent developments such as NSE, NSDL, Nifty and Sensex.
This page gathers the five book-back questions with the book's answer key checked against the lesson, plus additional questions with short explanations.
What you'll learn
- Trace the origin of stock exchanges and state their definitions.
- Explain the functions and features of a stock exchange.
- List the benefits of a stock exchange to the community, companies and investors, and its limitations.
- Name stock exchanges in India and describe brokers, jobbers, remisers and authorised clerks.
- Distinguish bull, bear, stag and lame duck speculators.
- Compare a stock exchange with a commodity exchange and describe NSE, SHCIL, STCI, NSDL, Nifty and Sensex.
Before you start
- Capital market and the difference between primary and secondary markets from the previous chapters.
- Meaning of shares, debentures and government bonds.
- Basic idea of a joint stock company.
Topics covered in this chapter
Stock Exchange explained
What this lesson covers
Origin, meaning and definition
The Amsterdam Stock Exchange, set up in 1602 by the Dutch East India Company (VOC), is the oldest in the world. India's first, the Native Share and Stock Brokers Association, was recognised on 31 August 1957 under the Securities Contracts (Regulation) Act, 1956 and became the Bombay Stock Exchange.
Functions and features
A stock exchange provides a ready and continuous market, correct evaluation through market quotations, protection to investors, capital formation and seasoning of securities. It deals only in listed, second-hand securities through members, needs Central Government recognition and acts as a financial barometer.
Benefits and limitations
Benefits are grouped for the community, the company and investors. Limitations include lack of uniformity, no restriction on membership and failure to control unhealthy speculation.
Stock exchanges in India and their traders
India has 24 stock exchanges. Brokers, jobbers (Taravaniwalas), remisers and authorised clerks trade on them, and speculators are called bull, bear, stag and lame duck.
Recent developments
The Pherwani Committee advocated the National Stock Market System: NSE (1992), SHCIL (1986), NCDS, STCI (1994) and NSDL (1996). Nifty tracks 50 NSE stocks and Sensex 30 BSE stocks.
Common mistakes to avoid
- Calling the London or Bombay exchange the oldest in the world. The Amsterdam Stock Exchange (1602) is the oldest; London is the most popular and Bombay the oldest in India.
- Thinking jobbers deal for clients. Jobbers trade on their own account and cannot take commission; brokers act for clients.
- Mixing up Tejiwala and Mandiwala. Tejiwala is the bull, Mandiwala the bear.
- Treating a lame duck as a bull. A lame duck is a bear who cannot fulfil his commitment to deliver.
- Placing Sensex on the NSE. Sensex is the BSE index of 30 stocks; Nifty is the NSE index of 50 stocks.
Test yourself on these with the practice test, then check the worked reasoning in the solved MCQs.
Frequently asked questions
What is a stock exchange?
A stock exchange, also called stock market or share market, is an organised market for buying and selling corporate and other securities under well-defined rules. It is an important part of the capital market and gives investors and companies a convenient and secure platform for trading.
Which is the oldest stock exchange in the world and in India?
The Amsterdam Stock Exchange, set up in 1602 by the Dutch East India Company and later renamed the Amsterdam Bourse, is the oldest in the world. The Bombay Stock Exchange, which grew out of the Native Share and Stock Brokers Association, is the oldest in India.
Why is a stock exchange called a financial barometer?
Stock exchanges are financial barometers and development indicators of the national economy. The movement of the stock exchange index reflects industrial growth and stability, so a rising or falling index signals the health of the economy.
What is the difference between a broker and a jobber?
A broker is a commission agent who brings buyers and sellers together and charges commission from both. A jobber is a security merchant who buys and sells on his own account to profit from price changes; he cannot deal for the public or take commission.
Who are bull and bear speculators?
A bull or Tejiwala expects prices to rise, buys now and sells later at a higher price; he is an optimistic speculator. A bear or Mandiwala expects prices to fall, sells now and buys later at a lower price; he is a pessimistic speculator.
What are Nifty and Sensex?
Nifty, from National and Fifty, is the NSE index of the 50 most actively traded stocks drawn from 24 sectors. Sensex, the sensitive index, is the BSE index of 30 stocks chosen by trading volume.
Last updated 16 October 2026