Q1. [1] § 4.1 Introduction § 4.1.1 Stock Exchange § 4.2 Products in the Secondary Markets
Statement-I : On account of non-delivery of securities by the trading member on the pay-in day, the securities are put up for auction by the exchange.
Statement-II : The exchange purchases the requisite quantity in auction market and gives them to the buying trading member.
- (A) Statement-I is true, but Statement-II is false.
- (B) Statement-I is false; but Statement-II is true.
- (C) Both Statement-I and Statement-II are false.
- (D) Both Statement-I and Statement-II are true.
Previously asked in CBSE board exam
2025 92 Q5 (v)
Generated by claude-sonnet-4-6 · 2026-06-15 07:06 · grounding rag
Model Answer
(D) Both Statement-I and Statement-II are true.
When a trading member fails to deliver securities on the pay-in day, the exchange puts the securities up for auction, purchases the required quantity, and delivers them to the buying trading member.
Explanation
Both statements correctly describe the auction process used by stock exchanges to handle delivery defaults. Statement-I describes the trigger (non-delivery on pay-in day) and Statement-II describes the exchange's remedial action (buying in auction and giving securities to the buyer). Examiners expect students to know this settlement mechanism.
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