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प्रश्न
Answer the following question
State the features of capital market.
उत्तर
It is the market for borrowing and lending long-term capital required by business enterprises. As per SEBI, the capital market is a market for long-term debt and equity shares.
The features of the capital market are as follows:
1) LINK BETWEEN INVESTORS AND BORROWERS: The capital market links investors with the borrowers of funds. It routes money from savers to entrepreneurial borrowers.
2) DEALS IN MEDIUM AND LONG-TERM INVESTMENT: In the capital market, medium and long-term financial instruments are traded. Through this market, corporates, industrial organisations, financial institutions access long-term funds from both, domestic as well as foreign markets.
3) PRESENCE OF INTERMEDIARIES: Capital market operates with the help of intermediaries. The intermediaries like brokers, underwriters, merchant bankers, collection bankers, etc. play an important role in the capital market.
4) PROMOTES CAPITAL FORMATION: Capital market provides a platform for investors and borrowers of long-term funds to engage in trade. This leads to capital formation in the economy as it mobilises funds.
5) REGULATED BY GOVERNMENT RULES, REGULATIONS, AND POLICIES: Capital market operates freely. However, it is regulated by government rules, regulations, and policies. E.g.: SEBI is the regulator of Capital markets.
6) DEALS IN MARKETABLE AND NON-MARKETABLE SECURITIES: It trades in both, marketable and non-marketable securities. Marketable securities are securities that can be transferred. E.g.: shares, debentures, etc. Non-marketable securities are those which cannot be transferred. E.g.: term deposits, loans, and advances.
7) VARIETY OF INVESTORS: It has a wide variety of investors including both, individuals (i.e. general public) and institutional investors like mutual funds, insurance companies, financial institutions, etc.
8) RISK: Risk is very high as the instruments have long maturity periods. But along with that, the return on investments is also very high.
9) INSTRUMENTS: Equity shares, preference shares, debentures, bonds, government securities and public deposits are the main instruments in capital market.
10) TYPES: Capital market is mainly classified into two main types, government securities market or gilt-edged market and industrial securities market. Industrial securities market is further classified into the primary and secondary markets.
APPEARS IN
संबंधित प्रश्न
Distinguish between money market and capital market.
The market where existing securities are resold or traded is called __________ market.
(a) commodity
(b) secondary
(c) primary
State the functions performed by financial market.
Helpequip Ltd. is a company dealing in distribution of medical equipments. The company recently imported 500 units of a diabetes monitoring machine which tests the sugar levels without taking blood samples. For deciding the marketing strategy, the Chief Executive Officer of the company called a meeting of the marketing heads of different zones. In the meeting, Sanjeev, the North Zone marketing head suggested that they need to visit hospitals to explain personally to the hospital staff who would be using the machine since the machine is sophisticated. He also suggested that additional staff may also be recruited for the same.
Rishu, another zonal head, was of this opinion that since a large amount of money had been spent on the purchase of the machines, additional funds were not available for recruiting the personnel as suggested by Sanjeev.
Ankur, a newly appointed zonal head of South Zone, suggested that since the size of the
order was not large, a detailed study of the factors determining the choice of channels of distribution was required before making the right choice.
1) Identify the factors influencing the choice of channels of distribution which were discussed in the meeting.
2) Also, explain the other considerations to be taken care of in each factor identified in part (a).
A market where short term funds are borrowed and lent.
State, with reasons, whether the following statements are True or False
The financial market contributes towards the nation's economic growth and development.
Distinguish between the following.
Money market and Capital market.
What are the functions of Financial Market?
Match the pairs :
| Group "A" | Group "B" | ||
| 1. | Private placement | a. | Recurring Deposit |
| 2. | N.S.D.L | b. | Dividend |
| 3. | Overdraft facility | c. | Evidence of deposit |
| 4. | Deposit receipt | d. | Interest |
| 5. | Returns on share | e. | Depository out of India |
| f. | A public company collecting capital privately |
||
| g. | Depository in India | ||
| h. | Evidence of ownership | ||
| i. | A private company collecting capital privately |
||
| j. | Current account |
Write a word or a term or a phrase which can substitute the following statement :
A definite promise in writing from a buyer for paying the amount on a specific Date.
What is financial market? And what is its role?
PRIMARY MARKET SECONDARY MARKET
Answer the following question.
What is meant by the 'Allocative Function' of Financial Markets?
Select the correct answer from the options given below and rewrite the statement.
A financial market is a market in which people trade _____________ and derivatives at low transaction costs.
Money market is a market for lending and borrowing of funds for _________ term.
Select the correct answer from the options given below and rewrite the statement.
____________ is the market for borrowing and lending long term capital required by business enterprises.
Write a word or a term or a phrase which can substitute the following statement.
A market where people trade financial securities and derivatives at low transaction cost
State whether the following statement is true or false
A Financial Market is a market in which people trade financial securities and derivatives at high transaction costs.
Explain the following term/concept.
Financial market
Explain the following term/concept.
Capital market
Study the following case/situation and express your opinion.
Mr. X is the CFO ( Chief Financial Officer ) of PQR Co. Ltd. which is a reputed company in the field of construction business. Often Mr. X has to decide on investing surplus funds of the company for short durations. And at times, he also has to decide the sources from where he can raise funds for short durations.
- Assume on behalf of the company Mr. X has Rs. 5 lakhs and wants to invest for a short period. Should he buy Equity shares or a Certificate of Deposit?
- The company has surplus funds and wants to invest it. However, he needs the money back in 4 months, so should he invest in Treasury Bills or Government Securities?
- Can the company issue a Certificate of Deposit?
Distinguish between the following.
Primary market and Secondary market
Vansh Limited is a large and reputed company which manufactures ventilators. After the outbreak of ‘COVID-19’ in 2020 the company witnessed an increase in revenue by 40%. It has plans to further increase its production capacity and also start production of PPE kits, sanitisers and masks in 2022. The Finance manager of the Company Mr. Rajiv feels confident about the future of the company and its liquidity position. Discuss the meaning of Dividend Decision and in the light of the above statement explain any two factors which should be considered by ‘Vansh Limited’ while formulating the dividend policy of the company.
Which of the following statements is false regarding financial market?
Full form of IFCI
What is meant by the financial market?
Study the following case/situation and express your opinion.
| Jack & Jones, a newly incorporated organization wants to raise capital for the first time by issuing equity shares. |
- Should it go for Primary Market or the Secondary Market?
- What will be the issue of equity shares by Jack & Jones called?
______ market where the company trades shares for the first time.
Distinguish between:
Primary Market and Secondary Market
The allocative function of Financial market helps in ______.
