Vth Sem BCOM - FINANCIAL MARKETS & SERVICES - Chapter 3 - Part 1

What is a capital market? Capital market is a market that deals in financial assets, which have a long or indefinite maturity. Capital market generally deals with long term securities. How can capital market be classified? Capital markets can be further classified as Industrial securities market Government securities market Long term loans market Write a note on industrial securities market? It is the market for industrial securities. Industrial security is means equity share, preference shares and debentures or bonds. It is a market where industrial organisation raise their funds by issuing the securities. Industrial markets are classified as follows Primary market or new issue market: it is the market in which newly created organisations or existing ones offer their issue for the first time. Secondary market: it is a market of the existing or old securities. It means the securities which are already issued through the primary market. Write a note on Government Securities Market or Gilt Edged Securities ? the government securities comprise dated securities issued by the government of India and state government. The date of maturity is specified in the securities. Therefore, it is known as dated government securities. at present there are dated securities with eternal up to 20 years in the market. Write a note on long term loans market? Generally development Banks and commercial banks supply long term loans to corporate investors. This market can be classified Term loans market Mortgages market Financial guarantees market What are the functions of capital market? Capital market is for raising funds for capital formation and investment. So the main function of capital market is  Investment function: which consist of capital formation and promotion of investment. The investment function of securities market can be viewed from various angles What are the features of a capital market? Capital market is the important segment of the financial system of a country. The following are its characteristics or features  It deals with long-term and medium term funds Trades both securitized and non securitized funds Channelize the flow of fund from undesirable activities to desirable activities Funds raised from the capital market is generally utilised for acquisition of Land And Building, plant and machinery and other fixed assets Capital market comprises of primary and secondary market Banks, commercial institutions, cooperative institutions and financial institutions are the intermediaries in the capital market It provides liquidity to the investment