Consider the following statements:
1. In comparison to other products, stocks markets offer higher returns and pose higher risks
2. Stock prices are governed by supply and demand
Which among the above is / are correct statements?

Answer: [C] Both 1 & 2

Historically, investors earned higher returns from stocks than from other products. As return and risk are correlated, they were also exposed to higher risks. To absorb this risk, you need superior analytical skills, deeper pockets to diversify across the market and essentially, the right attitude to book losses or profits. Intelligent investing in stocks is therefore, never easy. You can buy stocks either in the primary market or in the secondary market. You need to be doubly sure that you are investing in a fundamentally sound company before writing the cheque for an IPO. Buying shares in secondary market can be done only through a registered broker or a sub-broker.

Stock markets are places where buyers and sellers of stock meet to trade. The NSE and BSE is the most important exchanges in India. Stock prices change according to supply and demand. There are many factors influencing prices, the most important being earnings. There is no consensus as to why stock prices move the way they do.

This question is a part of GKToday's Integrated IAS General Studies Module