Manoj purchased 250 shares of Coal India Ltd. from the primary market.

1.	Manoj purchased 250 shares of Coal India Ltd. from the primary market. Later, he sold the shares of Coal India and earned a profit of Rs. 7,500/-. But all these transactions were done without physical transfer of share certificate. What is this system? What are the advantages of this system
Answer» Dematerialisation : It is a process by which physical share certificates are converted into an equivalent number of securities to be held in electronic form and credited in the investors’ account. For this, the investor has to open a Demat account with an organisation called a depository. Benefits of Depository Services and Demat Account (1) Sale and Purchase of shares and stocks of any company make easy. (2) Saves time. (3) No paperwork. (4) Lower transaction costs. (5) Ease in trading. (6) Transparency in transactions. (7) No counterfeiting of security certificate. (8) Physical presence of investor is not required in stock exchange.

Manoj purchased 250 shares of Coal India Ltd. from the primary market. Later, he sold the shares of Coal India and earned a profit of Rs. 7,500/-. But all these transactions were done without physical transfer of share certificate. What is this system? What are the advantages of this system

Answer»

Dematerialisation :

It is a process by which physical share certificates are converted into an equivalent number of securities to be held in electronic form and credited in the investors’ account. For this, the investor has to open a Demat account with an organisation called a depository.

Benefits of Depository Services and Demat Account

(1) Sale and Purchase of shares and stocks of any company make easy.

(2) Saves time.

(3) No paperwork.

(4) Lower transaction costs.

(5) Ease in trading.

(6) Transparency in transactions.

(7) No counterfeiting of security certificate.

(8) Physical presence of investor is not required in stock exchange.

Discussion

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