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    Question

    A financial regulatory instrument that is in place to

    prevent stock market crashes from occurring, is called
    A Circuit Breaker Correct Answer Incorrect Answer
    B Buffer Correct Answer Incorrect Answer
    C Shocker Correct Answer Incorrect Answer
    D Halters Correct Answer Incorrect Answer
    E Ring fencer Correct Answer Incorrect Answer

    Solution

    Also known as "collars," circuit breakers temporarily halt trading on an exchange or in individual securities when prices hit pre-defined tripwires. In Indian market it is at 10%, 15% and 20%. These circuit breakers when triggered bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the BSE Sensex or the Nifty 50, whichever is breached earlier.

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