SEBI rules for Listing of Securities
1.Copies of Memorandum and articles of association
,prospectus, Directors Reports, Balance sheets.
2.Specimen copies of share and Debenture
certificates, Letter of
3.Particulars regarding its capital structure.
4.A statement showing the distribution of shares.
5.Particulars of dividends and cash bonus during the
last 10 years.
The depository act was passed in 1996 allowing
dematerializing of securities and transfer of
security through electronic book entry to help
in reducing settlement risks and infrastructure
Advantages of a depository system
• It eliminates risks(no physical certificates)
• It is an electronic form and provides transfer
of securities immediately.
• A depositary provides a demat account with a
client identification number.
• There is no stamp duty on transfer of
securities because there is no physical tranfer.
• The DP charges a yearly charge for maintaing
the member account.
• Because of Depositary system even one share can
be sold than selling odd lots.
• Shares can be easily transferred at the time of
death of a participant.
• change in address recorded with DP gets
registered with all companies in which investor
holds securities electronically.
• Automatic credit of
bonus,split,consolidation,merger into demat
Working of a depositary system
• Depositary: it is an institution like bank.
• Depositary participant(DP): A DP is an agent of
• Opening of an account: An investor has to
approach a DP and fill up an account opening
form and follow the account opening
• Identification Number
• Conversion of shares into dematerialized form: In
order to dematerialize physical securities an
investor has to fill in a demat request form(DRF).
• Distinctive numbers:
• Purchase and sale of dematerialization shares.
• Transaction statement:
• Circuit breakers are a check on excessive
fluctuation in stock market prices.it is a
control system introduced by SEBI to be
effected when there is a great volatility in
trading of a particular scrip.
Ex:If NIFTY or SENSEX shows too much volatility
on a particular day and there is a fluctuation
of 10% in the index automatically circuit
breakers will apply.
• Bombay stock exchange was the first to
introduce online computerised trading of
scrips to replace manual trading practices.
BOLT system provides info on the best
buy and sell rates,pending and executed
orders,nogotiated and crossed deals.
Markowitz approach determines for the
investor the efficient set of portfolio through
three important variables ie Return,standard
deviation and co effient of correlation.It is
called the full covariance model
“Do not put all your eggs in one basket”
• The market is efficient:
• Common goal of avoiding risk.
• Maximum rate of return expected by
• Expected return can be found out by
multiplying probability with expected return
and standard deviation by two asset are three
• Markowitz bought out the theory that
correlate each other to reduce the risk.
• Every investor should expect maximum return
and minimum risk from this theory.
• Diversification can reduce maximum risk.
SEBI regulations for Mutual fund
• All mutual funds must be compulsorily
registered with SEBI.
• The sponsors should have contributed a
minimum of 40% of the net worth of the Asset
mgt company and should have a good
• All new mutual fund schemes have to be
approved by the trustees of mutual fund.
• The should follow SEBI rules to protect the
investor from high-risk exposure.
• A report has to be published for for each new
• SEBI permits MF to participate in its Security
• SEBI permits MF to invest in indian and foreign
ADR’s and GDR’s.
• SEBI has provided that 90% of the mutual
funds profits should be distributed every year.
• To protect the investors SEBI can impose
monetary penalties on mutual funds for
violating regulations and guidelines.
Classification of mutual fund
• Open ended
• Close ended
• Income fund
• Growth fund
• Dual fund company
• Index funds.
• Money market funds
• Municipal bond funds
• Pension funds
• Off shore funds
• Balanced fund
• Gilt fund
• Sector specific fund.
• Tax saving schemes.
• Fund of funds
Structure of a mutual fund
• Asset mgt company.
• Board of trustees.
• Custodian, bankers
NAV= value of securities –liabilities
No of outstanding units
Types of SWAPS
Financial swaps are a funding technique which
permit a borrower to access on market and
then exchange the liability for another type of
Interest rate swaps.
Cross currency interest rate swaps.
Ratio relevant for equity shareholders
no of equity shares
Price earning ratio
P/E ratio= MPS
• Operating profit margin.
• N/P margin.
• Current ratio
• D/E ratio
New policies of LIC
• Jeevan mitra.
• New Jan Raksha.
• Jeevan sathi.
• New money back policy.
• Bhavishya Jeevan.
• Bima sandesh.
• Jeevan Chhaya.
• Jeevan Griha plan.
• Jeevan Sukanya
Types of Preference shares
• Cumulative or non cumulative
• Participating and non participating preference
• Redeemable and non redeemable shares.
• Convertible and non convertible
Features of capital market
• Diversifying the savings of people through
• To bring in equal information to all investors.
• Provides Convenience through the function of
transmission of resources through financial
• Availability of borrowers and lender in the
capital market create allocational efficiency
• They bring about financial engineering.
The capital asset pricing module has been
propounded by Sharpe and is sometimes
considered to be an extension of the portfolio
ASSUMPTIONS OF CAPM
• Decision depends on risk and return of
• All investments are freely bought and sold.
• Shares can be sold at any time without any
• Transactions costs are nil.
• The investor makes an investigation without
taking into consideration the amount of tax
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