Question

Choose the correct statement about the meaning of depository.

Options

• Depository holds and transfers securities in the Demat Form.

• Depository serves as an intermediary and buys and sells securities on the instructions of clients.

• Depository is like a bank and keeps securities in electronic form on behalf of investors.

• Depository buys securities from a company and sells them to the public at a higher price.

Answer 1

Depository is like a bank and keeps securities in electronic form on behalf of investors.

Explanation:

A depository is an institution that holds investors’ securities, such as shares, bonds, or debentures, in electronic (Demat) form, just like a bank holds money. It ensures safe custody, transfer, and settlement of securities electronically, eliminating the need for physical certificates.