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Question
Explain the following term/concept.
Capital market
Solution
It is the market for borrowing and lending long-term capital required by business enterprises. The financial assets dealt with in the capital market have a long or indefinite maturity period. In this market, the capital funds comprising both equity and debt are issued and traded. The capital market is the core of a country's financial system as it helps in mobilisation of resources.
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RELATED QUESTIONS
Distinguish between Primarymarket and Secondary Market.
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| 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. |
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 |
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| Jack & Jones, a newly incorporated organization wants to raise capital for the first time by issuing equity shares. |
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Correct the underlined word and rewrite the following:
IPO is offered to existing equity shareholders.
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