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    FINANCIAL MARKET FULL CHAPTER part 2

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    FINANCIAL MARKET FULL CHAPTER part 2

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    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    2 views11 pages

    FINANCIAL MARKET FULL CHAPTER part 2

    Uploaded by

    devanshuamb18

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    You are on page 1of 11

    Financial

    Market
    Part - 2
    XII BUSINSESS STUDIES
    2022-2023
    SUNIL PANDA-
    THE EDUCATOR
    Capital market
    Capital market is a market for medium
    and long term fund it include all the
    organizations , institutions and
    instruments that provide long term and
    medium term Funds. It doesn’t include
    the instruments or institution which
    provide finance for short term [up to one
    year] common instruments are shares,
    debentures, public deposits , mutual
    funds, bonds etc.
    Nature or Features of capital market
    1. Link between savers and investment opportunities :- Capital market is a
    crucial link between saving and investment process.
    2. Deal in long term investment :- Capital market provides fund for long term
    and medium term .
    3. Use of intermediaries :-Capital market makes use of different intermediaries
    such as brokers, underwriters, depositories, etc. These intermediaries act as
    working organs of capital market and are very important elements of capital
    market.

    Sunil Panda
    4. Determinant of capital formation :- The activities of capital market
    determine the rate of capital formation in an economy. Capital market offers
    attractive opportunities to those who have surplus funds so that they invest
    more and more in capital market and are encouraged to save more for
    profitable opportunities.

    5. Government rules and regulations :- The capital market operates freely but
    under the guidance of government policies. These markets functions within
    the frame work of govt. rules and regulations. e.g. stock exchange works
    under the regulations of SEBI which is a govt. body

    Sunil Panda
    Types of Capital Market

    Sunil Panda
    Primary market

    The primary market is also known as the new issue market. I.e., New securities are
    issued by the company. A company can raise capital through the primary market in
    the form of equity, shares, preference shares, debentures, loans and deposits.
    Method of flotation of securities in primary market

    E-IPOS

    Right issue
    Private placement
    Offer for sale
    Offer through
    prospectus
    Method of flotation of securities in primary market
    1. Offer through prospectus:- This is the most popular method of raising
    fund by public companies in the primary market. Company issue
    prospectus Containing all the details of the company. This helps the
    public to know about the risk and earning potential of the company
    and accordingly there decides whether to invest or not in that
    company.

    O R E O P
    2. Offer for sale :- under this method new securities are offered to general
    public but not directly by the company. By an intermediary who buys
    whole lot of securities from the company and issue to general public at
    higher price. Under this method company is saved from the formalities and
    complexities of issuing security directly to the public.
    3. Private placement:- under this method the securities are sold by the
    company to an intermediary at a fixed price and then intermediaries sell
    these securities to selected clients. It helps to raise capital more quickly
    than a public issue. It is a cost saving Method.
    4. Right issue :- This is the right given to the existing shareholders to subscribe
    to a new issue of share at reduced price before it issued to general public. It is
    mandatory for companies.
    5. E-IPOS:- It refers to issuing security through the online system of a Stock
    Exchange . In this, company has to appoint registered brokers for the purpose
    of accepting applications and placing orders. The manager coordinate the
    activities through various intermediaries connected with the issue.
    Thank you
    KEEP ON SUPPORTING

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