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Capital market 1
 

Capital market 1

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    Capital market 1 Capital market 1 Presentation Transcript

    • Capital Market
    • Capital Market • Institutional arrangement for borrowing of long term funds. lending and • Consists of series of channels through which the savings of the community are made available for industrial and commercial enterprises and public authorities.
    • Functions • Mobilization of financial resources on a nation wide scale. • Leads to economic growth at a faster rate. • Directs the flow of savings into most profitable channels
    • Primary Market Or New Issue Market • Primary market is a market for raising long term sources of finance. • New securities that have never been previously issued are offered. • Both the new and existing companies can raise capital from this market. • Facilitate the transfer of funds from willing investors to entrepreneurs setting up new companies or going in for expansion, growth or modernization.
    • Securities dealt in primary market Securities Ownership securities Equity Shares Creditorship securities Preference shares No par stock Debentures
    • Ownership securities
    • 1. Equity Shares • Equity shareholders are the real owners of the company. • Have a control over the working of the company. • Paid dividend after paying it to preference shareholders. • Rate of dividend depend upon the profits of the company. • No dividend in case of no profits. • Cannot be redeemed during the lifetime of the company.
    • Characteristics of equity shares Maturity Right to income Claims on assets Voting rights Pre-emptive right
    • 2. Preference Shares • These shares have certain preferences as compared to other types of shares. • Fixed rate of dividend is paid on preference share capital. 2 Preferences Preference for payment of dividend Repayment of capital
    • Features of preference shares Maturity Claims on assets Features Control Claims on income
    • Types of preference shares • Cumulative preference shares • Non-cumulative preference shares • Convertible preference shares • Non-Convertible preference shares • Redeemable preference shares • Irredeemable preference shares • Participating preference shares • Non-Participating preference shares
    • 3. No Par Stock • Shares having no face value • Capital of the company issuing such shares is divided into a number of specified shares without any specific denomination • Share certificate of the company states number of shares held by the owner without mentioning any face value • Value of such share determined by dividing the real net worth of the company with the total number of shares of the company • Dividend is paid on per share
    • Creditorship securities
    • Debentures or Bonds • It is a document under the company’s seal which provides for the payment of a principal sum and interest thereon at regular intervals. • Debenture holder is the creditor of the company. • A fixed rate of dividend is paid on the debentures.
    • Types of Debentures Unsecured debentures Secured debentures Bearer debentures Redeemable debentures Convertible debentures Irredeemable debentures
    • Features of Debentures Maturity Claims on income Claims on assets Control