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Answer in one sentence.
What is financial market
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Explain the following term/concept.
Financial market
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Explain the following term/concept.
Capital market
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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?
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Distinguish between the following.
Primary market and Secondary market
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Answer in brief.
State any four functions of the financial market.
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Answer the following question
State the features of capital market.
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Match the pairs.
| Group ‘A’ | Group ‘B’ |
| a) Debenture certificate | 1) Sum of current assets |
| b) FPO | 2) Decided and declared by the board of directors |
| c) Working capital | 3) Any issue after First-time Public offer |
| d) Final dividend | 4) Sum of current liabilities |
| e) Preference share capital | 5) First-time Public offer |
| 6) Risk capital | |
| 7) Document of ownership | |
| 8) Safe capital | |
| 9) Instrument of debt | |
| 10) Decided by board; declared by members |
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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. |
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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?
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Correct the underlined word and rewrite the following:
IPO is offered to existing equity shareholders.
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______ market where the company trades shares for the first time.
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Distinguish between:
Primary Market and Secondary Market
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Match the pairs:
| Group 'A' | Group 'B' | ||
| (a) | Working capital | (1) | First-time issue of shares |
| (b) | Preference shareholders | (2) | Conversion into secured debentures |
| (c) | FPO | (3) | Debts (borrowed) Capital |
| (d) | Convertible debentures | (4) | Bold investors |
| (e) | Share Capital | (5) | Sum of current assets |
| (6) | Any issue after the IPO | ||
| (7) | Conversion into equity shares | ||
| (8) | The sum of current liabilities | ||
| (9) | Owned Capital | ||
| (10) | Cautious investors | ||
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If a Shares of Rs.100 is issued at Rs,110, it is said to be issued at ............................
- Par
- Profit
- Premium
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Distinguish between money market and capital market.
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A ____________ is an indivisible unit of share capital.
(a) debenture
(b) share
(c) bond
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Debenture certificate must be issued within ___________ months of allotment.
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The market where existing securities are resold or traded is called __________ market.
(a) commodity
(b) secondary
(c) primary
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Shares and Debentures
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