Multiple choice general knowledge

Circuit breaker is used by stock exchanges to:

  1. freeze the depository accounts of investors manipulating the market.

  2. stop trading in counters (scrips) wherein there is excessive volatility.

  3. close the exchange in case of a abnormal fluctuations in the index.

  4. switch off terminals of those brokers who are speculating excessively.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Circuit breakers temporarily halt trading in specific securities (scrips) experiencing excessive volatility. This cooling-off period prevents panic-driven price movements. They don't close the entire exchange or target specific brokers. The mechanism applies to individual counters, not depository accounts.

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