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Capital Market:

What Does Capital Markets Mean? A market in which individuals and institutions trade financial securities. Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary and secondary markets.

Classification Primary market Secondary market


What Does Primary Market Mean? A market that issues new securities on an exchange. ompanies, governments and other groups obtain financing through debt or e!uity based securities. "rimary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors. What Does Secondary Market Mean? A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges # such as the $ew %ork &tock 'xchange and the $A&(A) are secondary markets. &econdary markets exist for other securities as well, such as when funds, investment banks, or entities such as *annie +ae purchase mortgages from issuing lenders. ,n any secondary market trade, the cash proceeds go to an investor rather than to the underlying company/entity directly.

-IPOs - Initial Public Offering - IPO Mean? The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to e pand, but can also be done by large privately o!ned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an under!riting firm, !hich helps it determine !hat type of security to issue "common or preferred#, the best offering price and the time to bring it to market. $lso referred to as a %public offering%. -NSE - National Stock Exchange Of India imited - NSE Mean?
The $ational &tock 'xchange is ,ndia-s largest financial market. 'stablished in .//0, the $&' has developed into a sophisticated, electronic market, which ranks third in the world for transacted volume. The $&' conducts transactions in the wholesale debt, e!uity and derivative markets.

BSE - !ombay Stock Exchange "!SE# $!O Mean?


The first and largest securities market in ,ndia, the 1ombay &tock 'xchange 21&'3 was established in .456 as the $ative &hare and &tock 1rokers- Association. 1ased in +umbai, ,ndia, the 1&' lists over 7,888 companies and is one of the largest exchanges in the world. The 1&' has helped develop the country-s capital markets, including the retail debt market, and helped grow the ,ndian corporate sector.

Sensex - Sensex Mean?


An abbreviation of the 1ombay 'xchange &ensitive ,ndex 2&ensex3 # the benchmark index of the 1ombay &tock 'xchange 21&'3. ,t is composed of 98 of the largest and most actively#traded stocks on the 1&'. ,nitially compiled in ./47, the &ensex is the oldest stock index in ,ndia. -%hat is SE!I& %hat is the main role of SE!I& &ecurities and 'xchange 1oard of ,ndia 2&'1,3 A body set up in response to the provision of the &ecurity and 'xchange 1oard of ,ndia Act of .//0 with the aim of protecting the interest of investors, promoting the development of investments in securities, and controlling the security market. &'1, became a statutory body in 0886 upon changes made to the original act.

What are depositories?


A bank or company which holds funds or securities deposited by others, and where exchanges of these securities take place.

Mutual Funds& - 'hat are (utual )unds- $dvantages- 'hich companies come under that*
An open#ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of ob:ectives. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. +utual funds then take the money they receive from the sale of their shares 2along with any money made from previous investments3 and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. ,n return for the money they give to the fund when purchasing shares, shareholders receive an e!uity position in the fund and, in effect, in each of its underlying securities. *or most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund. 1enefits of mutual funds include diversification and professional money management. +utual funds offer choice, li!uidity, and convenience, but charge fees and often re!uire a minimum investment. A closed#end fund is often incorrectly referred to as a mutual fund, but is actually an investment trust. There are many types of mutual funds, including aggressive growth fund, asset allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund, crossover fund, e!uity fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, money market fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax#free bond fund.

- Types of shares- $dvantages + importance


What Does Shares Mean? A unit of ownership interest in a corporation or financial asset. ;hile owning shares in a business does not mean that the shareholder has direct control over the business-s day#to#day operations, being a shareholder does entitle the possessor to an e!ual distribution in any profits, if any are declared in the form of dividends. The two main types of shares are common shares and preferred shares.

What Does Preference Shares Mean? ompany stock with dividends that are paid to shareholders before common stock dividends are paid out. ,n the event of a company bankruptcy, preferred stock shareholders have a right to be paid company assets first. "reference shares typically pay a fixed dividend, whereas common stocks do not. And unlike common shareholders, preference share shareholders usually do not have voting rights. Also referred to as preferred stock.

Equity Shares: ,-.IT/ S0$1, is a share or class of shares !hether or not the share carries voting rights, b. any !arrants, options or rights entitling their holders to purchase or ac2uire the shares referred to under "a#, or c. other prescribed securities. $n e2uity share is a perpetual liability because it signifies an o!ners legal demand upon the assets of the entity in !hich the e2uity share if held.
What Does 'ebenture Mean? A type of debt instrument that is not secured by physical asset or collateral. (ebentures are backed only by the general creditworthiness and reputation of the issuer. 1oth corporations and governments fre!uently issue this type of bond in order to secure capital. <ike other types of bonds, debentures are documented in an indenture.

- 'hat is 3$4 and ho! is it calculated*


What Does Net (sset )alue - N() Mean? A mutual fund-s price per share or exchange#traded fund-s 2'T*3 per#share value. ,n both cases, the per#share dollar amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.

What Does 'eri*ati*e Mean? A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. ,ts value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. +ost derivatives are characterized by high leverage.

- What is difference between Shares & Debentures?


The following are the main difference between a debenture and a share:

A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder. Debenture holder is a creditor of the company and cannot take part in the management of the company while a shareholder is the owner of the company. It is the basic distinction between a debenture and a share. Debenture holders will get interest on debentures and will be paid in all circumstances, whether there is profit or loss will not affect the payment of interest on debentures. Shareholder will get a portion of the profits called dividend which is dependent on the profits of the company. It can be declared by the directors of the company out of profits only. Shares cannot be converted into debentures whereas debentures can be converted into shares. Debentures will get priority is getting the money back as compared to shareholder in case of li uidation of a company. There are no restriction on issue of debentures at a discount, whereas shares at discount can be issued only after observing certain legal formalities. !onvertible debentures which can be converted into shares at the option of debenture holder can be issued whereas shares convertible into debentures cannot be issued. There can be mortgage debentures i.e. assets of the company can be mortgaged in favor of debenture holders. "ut there can be no mortgage shares. Assets of the company cannot be mortgaged in favor of shareholders.

Custodian Bank : Importance of !ustodian "ank:


A bank that holds and manages a client#s securities or other assets on his$her behalf. %or e&ample, the bank may hold stock certificates for the client. This reduces the risk of the client losing his$her assets or having them stolen. A custodian bank provides an investor a place to store assets with little risk. !ustodian banks normally charge a fee for their services
What Does Contingent iability Mean? .. The possibility of an obligation to pay certain sums dependent on future events. 0. (efined obligations by a company that must be met, but the probability of payment is minimal.

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