CAPITAL MARKET

CAPITAL MARKET IS A MARKET WHICH DEALS WITH LONG TERM ASSETS CREATION.
CAPITAL MARKET-
A) DEBT- 1) BOND. 2) DEBENTURE

B) SHARE MARKET - 1) EQUITY SHARE. ( IPO / FPO / RIGHT ISSUE )

2) PREFERENCE SHARE
PRIMARY MARKET- IT IS A MARKET WHERE COMPANY TO CUSTOMER DEALS TAKES PLACE.

SECONDARY MARKET- IT IS A MARKET WHERE CUSTOMER TO CUSTOMER DEALS TAKES

PLACE.

IPO - WHEN A / UNLISTED COMPANY FIRST TIME SELLING SHARE TO PUBLIC THROUGH
PRIMARY MARKET.

FPO- WHEN A COMPANY SELLING SHARE SECOND TIMES, THIRD TIME AND SO ON AFTER
GET LISTED IS KNOWN AS FPO.

RIGHT ISSUE- AFTER IPO OR FPO ISSUE IF CO UNABLE TO SELL SOME SHARE THEN SHARES
ISSUED SOME DISCOUNT TO THEIR EXISTING SHAREHOLDER.

BONUS ISSUE- WHEN A COMPANY DISTRIBUTE DIVIDEND FROM THEIR EXCESS RESERVE
ACCORDING TO PROPORTION OF SHARES HOLDING IS KNOWN AS BONUS ISSUE.

BOND- IT IS ISSUED BY GOVT TO PUBLIC TO TAKE LOAN FOR LONG PERIOD OF TIME.

DEBENTURE- IT IS ISSUED TO PUBLIC FOR CORPORATE LONG TERM FUND REQUIREMENT. IT

IS INSECURE IN NATURE.

PREFERENCE SHARE- IT IS SHARE BUT ACT LIKE AN INSURANCE CONTRACT. PREF SHARE
HOLDER GET PREFERENCE WHILE COMPANY DISTRIBUTING PROFIT BY COMPANY.

EQUITY SHARE- THIS TYPE OF SHAREHOLDER HAVING VOTING RIGHT AND CAN ATTAIN AM
AND CAN PARTICIPATE COMPANY’S DECISION MAKING PROCESS. EQUITY SHARE HOLDER
FACE HIGH RISK WITH HIGH RETURN.

ADR- IT IS A DEPOSITORY SYSTEM WHERE A COMPANY WANTS HUGE FUND FOR LONG
PERIOD OF TIME ASK PERMISSION FROM ONLY USE STOCK EXCHANGE WITH INDIAN STOCK
EXCHANGE. AFTER FULFILLING ALL NECESSARY REQUIREMENTS CORPORATE GET
PERMISSION TO COLLECT MONEY FROM USA STOCK EXCHANGE THROUGH GET LISTED AS
ADR.

GDR- IF CORPORATE GOT PERMISSION FROM MULTIPLE STOCK EXCHANGES IS KNOWN AS

GLOBAL DEPOSITORY RECEIPT.

IDR- IF FOREIGN COMPANY ASKING PERMISSION FROM INDIA IS KNOWN AS IDR.

DERIVATIVE- WHEN THE VALUE OF ANY ASSETS DEPENDS UPON THE VALUE OF
UNDERLYING ASSETS IS KNOWN AS DERIVATIVE.

FORWARD CONTRACT- IT IS INFORMAL OVER THE COUNTER CONTRACT BETWEEN TWO

PARTIES TO DELIVER CERTAIN ASSETS AT PRE AGREED PRICE AFTER CERTAIN PERIOD OF
TIME. BECAUSE THERE IS NO REGULATORY BODY IF COUNTER PARTY RISK ARISES THEN
SETTLEMENT DONE WITH THE HELP OF COURT.

FUTURE CONTRACT - IT IS STANDARDIZE CONTRACT BETWEEN TWO PARTIES WHERE

BUYER/SELLER HAVING BOTH RIGHT AND OBLIGATION TO SETTLE THAT DEAL AT PRE
AGREED PRICE AND PERIOD. BECAUSE OF REGULATORY THERE IS NO COUNTER PARTY RISK.

OPTION- IT IS ASTANDARDIZED CONTRACT WHERE BUYER/SELLER HAVING RIGHT BUT NO

OBLIGATION TO SETTLE THAT DEAL AT PRE AGREED PERIOD BECAUSE HERE LOSS IS LIMITED
UP TO THE EXTENT OF INVESTMENT AMOUNT.

SWAP- IT IS A PROCEDURE OF DIVERSIFICATION OF RISK. THERE ARE 2 TYPES OF SWAP- 1)

CURRENCY RATE SWAP. 2) INTEREST RATE SWAP.

ASBA- APPLICATION SUPPORTED BY BLOCKED AMOUNT. HERE APPLICATION IS VALID IF

AMOUNT IS BLOCKED IN CUSTOMERS OWN ACCOUNT. WHEN COMPANY ALLOT SHARE
THAN AMOUNT DIRECTLY GET DEDUCTED FROM CUSTOMERS ACCOUNT AND SHARE GET
CREDITED TO CUSTOMERS DEMAT ACCOUNT. IT IS USED UNDER PRIMARY MARKET.

DEMAT ACCOUNT- PREVIOUSLY SHARE SHOULD BE ISSUED IN MATERIAL FORM (LIKE FIXED
DEPOSIT) BUT TO PROVIDE MORE LIQUIDITY ITSMATERIALIZED FORM CONVERTED
DEMATERIALISED FORM.
MUTUAL FUND- IT IS AN INSTRUMENT TO COLLECT MONEY FROM PUBLIC AND INVEST IN
DIFFERENT MARKET (SHARE, DEBT, GOLD, MONEY MARKET) ACCORDING TO THE CHOICE
OF PUBLIC.
NAV- NET ASSET VALUE. PER UNIT COST OF INVESTMENT IN MUTUAL FUND IS KNOWN AS
NAV. TOTAL ASSETS/ TOTAL OUTSTANDING NUMBER OF SHARE.

AUTHORIZED CAPITAL - IT IS A CAPITAL A COMPANY CAN RECEIVE FROM MARKET IN IT LIFE

TIME (MAY INCREASE).

ISSUED CAPITAL- IT IS A PART OFAUTHORIZED CAPITAL ISSUED FOR SUBSCRIPTION FOR

PUBLIC.
SUBSCRIBED CAPITAL- IT IS A PART OF CAPITAL PUBLIC OFFERED AGAINST INVITATION OF
OFFER BY COMPANY TO PUBLIC.

PAID UP CAPITAL- IT IS AN AMOUNT PUBLIC SUBSCRIBED AND COMPANY RECEIVED

AMOUNT FROM SHARE HOLDER.

HEDGING- IT IS A PROCEDURE TO DIVERSIFY RISK BY USING DIFFERENT INVESTMENT

TOOLS. LIKE BOND, EQUITY SHARE CURRENCY, GOLD ETC.

ARBITRAGE- IT IS A PROCEDURE TO GENERATE PROFIT BY USING TWO DIFFERENT MARKETS

PRICE FLUCTUATION.

BULL MARKET- IF SHARE MARKET MOVING POSITIVELY ON UPWARD DIRECTION IS KNOWN

AS BULL MARKET.

BEAR MARKET- IF SHARE ARE MOVING NEGATIVELY DOWNSIDE IS KNOWN AS BEARISH

MARKET.
BLUE CHIP COMPANIES- LARGE CAP SHARES (CAPITAL MORE THAN 10000 CR) IS KNOWN
AS BLUE-CHIP SHARE.
SEBI- SECURITY EXCHANGE BOARD OF INDIA. SEBI IS A REGULATOR (LIKE RBI FOR BANK)
TO AVOID FRAUD, CHEATING ACTIVITY IN SHARE MARKET AS WELL AS PROMOTE AND
EDUCATE PUBLIC.

INDEX- IT IS A SAMPLE OF OVERALL SHARE MARKET LIKE NIFTY, SENSEX ETC.

SENSEX- IT IS AN INDEX OF BOMBAY STOCK EXCHANGE OF BEST SHARES. IT IS MANAGED BY

STANDARD AND POOR’S (S&P) AND ALTERS TIME TO TIME ACCORDING TO THEIR
PERFORMANCE.

NIFTY- NIFTY IS THE INDEX OF NSE WHERE FEW THOUSAND SHARES ARE LISTED. CRISIL
RATING AGENCY MANAGED INDEX WITH BEST 50 SHARES AND ALTER IF REQUIRED.