Financial management revision question and answer

CPA-Financial-Management-Section-3 Revision kit

(i)What are the advantages of a central depository system (CDS) for a stock
market?

(ii) What problems are likely to be experienced in the initial introduction of a central depository system (CDS) in a stock market?
ANSWER

Advantages of central depositing system (CDS)
– refer to Question 1 b(ii) June 2000

(ii) Problems in initial introduction of CDS
– Security risk on implementation of CDS.
– Infrastructural support framework.
– Legal framework of regulating electronic ownership of shares.
– Will the management team be effective to ensure success?

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