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प्रश्न
Distinguish between Primarymarket and Secondary Market.
उत्तर
| Sr | Points | PRIMARY MARKET | SECONDARY MARKET |
| 1 | Meaning | The market is utilized for raising fresh capital in the form of shares and debentures. | It is a market where existing securities are resold or traded. |
| 2 | Function | The function is to raise long term funds through fresh issue of securities. | The function is to provide continuous and ready market for existing long term securities. |
| 3 | Participants | The participants are financial institutions, mutual fund, under writer, individual investor. | The participants of primary market as well as the stock brokers and the members of the stock exchange are the participants. |
| 4 | Listing Requirements | Listing is not required in the case of primary market. | Only listed securities can be dealt in the secondary market. |
| 5 | Determinants of Prices | The prices are determined by the management of the corporate houses with due compliances with the SEBI requirements for new issue of securities. |
in case of secondary market the prices are determined by forces of demand and supply in the market and they keep on fluctuating. |
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संबंधित प्रश्न
Distinguish between money market and capital market.
Today, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed the most. To give strength to the economy SEBI is undertaking measures to develop the capital market. In addition to this, there is another market in which unsecured and short-term debt instruments are actively traded every day. These markets together help the savers and investors in allocating the available funds into their most productive investment opportunity.
1)Name the function being performed by the market in the above case.
2) Also, explain three other functions performed by this 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).
Bharat Express specialises in Courier Services. Its 'wide range of express package and parcel services' help business firms to make sure that the goods are made available to the customers at the right place and at the right time. A state with reason, whether the working capital requirements of 'Bharat Express' will be high or low
Distinguish between the following.
Money market and Capital 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.
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.
When the trade bills are accepted by commercial banks it is known as _________.
Money market is a market for lending and borrowing of funds for _________ term.
Find the odd one.
Explain the following term/concept.
Financial 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?
Answer in brief.
State any four functions of the financial 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.
What are the functions of a financial market?
Match the FUNCTIONS of Financial Markets in Column I with their correct MEANING in Column II
| Column I | Column II | ||
| (a) | Allocated Function | (i) | Establish a price for the financial asset through interaction between house-holds and business firms. |
| (b) | Facilitating Price Discovery | (ii) | Easy purchase and sale of financial assets. |
| (c) | Financial Assets Liquidity | (iii) | Mobilization of savings and channelising them into the most productive use. |
Which of the following statements is false regarding financial market?
Tractors Pvt. Ltd. producing 2,00,000 trucks and generating revenue of Rs. 2,000 crores annually, has recently acquired the world's second largest truck manufacturing company. After this acquisition, Tractors Pvt. Ltd. will become the world's largest truck manufacturer. For financing the acquisition, the company had to arrange about Rs. 1,00,000 crores through debt and equity. ______ function is being performed by the company for arranging the funds through debt and equity.
Which of the following statements is incorrect regarding Financial Markets?
Full form of IFCI
Match the pairs:
| Group 'A' | Group 'B' |
| (a) Investment in debenture | (1) Deals with acquisition and use of capital. |
| (b) Financial market | (2) Must inform the stock exchange about dividend declaration. |
| (c) Price of shares mentioned in the prospectus | (3) Trading of financial securities |
| (d) Corporate finance | (4) Safe and secure investment |
| (e) Listed company | (5) Must inform the government about dividend declaration |
| (6) Fixed price issue method | |
| (7) Risky investment | |
| (8) Trading of commodities. | |
| (9) Deals with acquisition and use of assets. | |
| (10) Book-Building Method. |
Match the various terms of Financial Markets Column - I with their respective Statements in Column - II
| Column - I | Column - II | ||
| a. | Financial market | i | It is also known as the Stock market |
| b. | Primary market | ii | It is a market for creation and exchange of financial assets. |
| c. | Secondary market | iii | It is also known as New issue market |
What is meant by the financial market?
Correct the underlined word and rewrite the following:
IPO is offered to existing equity shareholders.
______ 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 ______.
