Primary market, Financial Management

Assignment Help:

Primary Market

In an economy, at a given point of time, there will be people/entities called savers the surplus units, whose current income exceeds their current expenditure while there are others called investors/deficit units whose current expenditure exceeds their income.
The function of a financial system is to channelize the funds from the surplus units to the deficit units. An efficient financial system not only encourages savings and investments but also efficiently allocates resources in different investment avenues and thus accelerates the rate of economic development.

Capital markets enable the flow of capital in the most profitable channels. Companies, which have more profitable investment opportunities are normally able to raise funds in the capital market because its shares are listed on the stock exchange. The performance of the company is reflected in the market price of the equity stocks. Put differently, the company's performance is more visible in the eyes of the public. Such a public exposure normally induces companies to raise their standard of performance.
The companies, public or private, raise their long-term finance from the primary market. Primary market is a major channel through which the household savings are mobilized by companies and the Government. The issuance of shares and debentures takes place in this market. The issuance of shares or debentures may be through a public offer or a rights issue. Industries raise capital in the form of financial obligations. These financial obligations may be in the form of shares or debentures.

 


Related Discussions:- Primary market

Working of financial services authority, Working of FSA The FSA Board ...

Working of FSA The FSA Board is responsible for the management of FSA. It is appointed by the Treasury. It consists of a chairman, a chief executive officer, three managing dir

What is the time value of money, What is the time value of money? The t...

What is the time value of money? The time value of money signifies that money you hold in your hand today is worth more than money you expect to receive in the future. Likewise

Commercial paper, Commercial Paper (CP) is a short-term unsecured pro...

Commercial Paper (CP) is a short-term unsecured promissory note issued in the open market. It also represents the obligation of the issuer. Normally, it is issued

What do you signify by organisation of finance function, Q. What do you sig...

Q. What do you signify by Organisation of Finance Function? Describe the functions of Financial Manager. Ans. Organisation of Finance Function: - Organization of finance functi

IFM, 38. The optimum capital structure is the one with i) highest value of ...

38. The optimum capital structure is the one with i) highest value of the firm ii) Lowest value of the firm iii) highest shares in numbers iv) highest debt

Convexity measure , We can measure the convexity with the help of following...

We can measure the convexity with the help of following formula:                                                                              ...Eq. (4) Where,          Δ

Micro/Macro Question, You have been hired as an economic advisor to the Sou...

You have been hired as an economic advisor to the Southeastern Conference. As your first assignment they have asked you to identify three microeconomic and three macroeconomic issu

Money market mutual fund, Money Market Mutual Fund Even as the Mutual F...

Money Market Mutual Fund Even as the Mutual Funds show a promise of becoming a major instrument of household savings, another concept which is being talked about and waiting to

Emerging market bonds, Emerging market bonds are the bonds offe...

Emerging market bonds are the bonds offered by less developed countries. The government normally issues them. These exclude borrowings from gove

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd