What does receipt against payment (RAP) refer to according to its operation?

• A. Used primarily for new account openings
• B. Similar to DAP but for selling shares
• C. Part of margin accounts
• D. For transferring funds between banks

Answer: (B)

Receipt Against Payment (RAP) is a transaction method that involves the delivery of securities in exchange for payment, typically used in the context of buying and selling shares. This mechanism ensures that the buyer receives the shares only after the payment has been made or guaranteed, providing security for both the seller and the buyer. Because RAP is specifically utilized for share transactions, it can be viewed as analogous to Delivery Against Payment (DAP), which also involves the exchange of securities for payments, although DAP is generally used in contexts that might not focus solely on shares.

The other options do not accurately describe RAP. For instance, while it involves the concept of payment and receipt, it is not specifically limited to new account openings or transferring funds between banks, nor is it directly related to margin accounts. Instead, RAP emphasizes the secure exchange of shares for payment, thus solidifying its role in share trading transactions.