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Capital market:
The term capital market is used to denote all the activities of the primary and secondary markets. It can also refer to the market for equity and debt instruments, which have a maturity of more than one year. Corporates, individuals and institutions participate in the capital market. The corporates raise capital required for their business in this market. The contribution of capital formation in the economic development is indispensable as already discussed in the earlier chapters. Capital is one of the important factors of production in the economy. Thus, the contribution of capital market which undertakes the investment and capital formation activities, is imperative in the economic development of a country. Mobilizing the savings from the surplus sectors in the economy in the form of investments, the capital market enables the deficit sectors in the economy to meet their needs. It also intermediates in the activities of the savers and the investors. The stock market, which is a part of the capital market, provides liquidity and marketability for the financial instruments. The important characteristics of the capital market are as follows:
An efficient capital market indicates the underlying strength or the health of the economy.
Capital market can be segmented into -
Advantages of Private Mutual Funds It is felt that the entry of private Mutual Funds would encourage competitiveness in the financial sector and promote the existing investment
Credit rating agencies carry out credit rating. Companies appoint these agencies to assign credit rating for their corporate issues. The rating agencies may condu
Calculation of weighted average cost of capital (WACC) Market values Market value of equity = 5m × 4.50 = $22.5 million Market value of preference shares = 2.5m × .0762 =
Settlement Mechanism: Nifty index futures and option contracts are cash settled. All CMs are required to open a separate bank account with NSCCL designated clearing banks. T
The following treasury issues can be included for the construction of the curve: On-the-run treasury issues. On-the-run treasury issues and sele
Q. A sum of $2,500 is deposited in a bank account that pays 5.25% interest compounded weekly. How long will it take for the deposit to double? How long will it take you to accrue
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Value Index Numbers The value index number as described earlier is a combination index which combines price and quantity changes. Because of the difficulties experienced in pri
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Mutual funds Mutual funds pool resources from a lot of individuals and companies and invest these resources in diversified portfolios of bonds, stocks and money market instrume
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