SlideShare a Scribd company logo
1 of 1
Download to read offline
Explain briefly how secondary markets help facilitate capital formation (investment in real
assets).
Solution
Capital formation takes place as a result of increase/addition in the existing level of capital stock
such as buildings, equipment or other forms of real assets. Secondary markets donot directly
contribute to the process of capital formation as is the case with primary markets. However, the
transfer of capital from surplus spending units (SSUs) to deficit spending units (DSUs) through
various financial intermediaries result in the formation of capital as DSUs are able to utilize such
borrowed capital/funds for procuring assets. SSUs are mostly investors/lenders and DSUs are
borrowers. In simple words, the process of borrowing money from from such lenders for the
purpose of making investments in tangible assets (particularly fixed assets) facilitate capital
formation in the secondary markets.

More Related Content

Similar to Explain briefly how secondary markets help facilitate capital format.pdf

1 introduction to financial mgt
1 introduction to financial mgt1 introduction to financial mgt
1 introduction to financial mgt
Dr. Abzal Basha
 
initial-public-offer
initial-public-offerinitial-public-offer
initial-public-offer
Ajin Lal
 
Chapter 02_Overview of the Financial System
Chapter 02_Overview of the Financial SystemChapter 02_Overview of the Financial System
Chapter 02_Overview of the Financial System
Rusman Mukhlis
 
Indian financial system 1
Indian financial system 1Indian financial system 1
Indian financial system 1
Aditya Kumar
 

Similar to Explain briefly how secondary markets help facilitate capital format.pdf (20)

Session 02 - Role of Financial Markets and Institutions.pptx
Session 02 - Role of Financial Markets and Institutions.pptxSession 02 - Role of Financial Markets and Institutions.pptx
Session 02 - Role of Financial Markets and Institutions.pptx
 
1 introduction to financial mgt
1 introduction to financial mgt1 introduction to financial mgt
1 introduction to financial mgt
 
An Overview of Financial System
An Overview of Financial SystemAn Overview of Financial System
An Overview of Financial System
 
Ch 2 - Financial environment.pdf
Ch  2 - Financial environment.pdfCh  2 - Financial environment.pdf
Ch 2 - Financial environment.pdf
 
initial-public-offer
initial-public-offerinitial-public-offer
initial-public-offer
 
Know About Banking Instruments And Their Types.pptx
Know About Banking Instruments And Their Types.pptxKnow About Banking Instruments And Their Types.pptx
Know About Banking Instruments And Their Types.pptx
 
07_chapter 1.pdf
07_chapter 1.pdf07_chapter 1.pdf
07_chapter 1.pdf
 
Chapter 02_Overview of the Financial System
Chapter 02_Overview of the Financial SystemChapter 02_Overview of the Financial System
Chapter 02_Overview of the Financial System
 
Unit I CMO.pptx
Unit I CMO.pptxUnit I CMO.pptx
Unit I CMO.pptx
 
Overview of Financial Market, Institution and System
Overview of Financial Market, Institution and SystemOverview of Financial Market, Institution and System
Overview of Financial Market, Institution and System
 
Capital market
Capital marketCapital market
Capital market
 
UNIT I.pptx
UNIT I.pptxUNIT I.pptx
UNIT I.pptx
 
Indian financial system 1
Indian financial system 1Indian financial system 1
Indian financial system 1
 
INDIAN FINANCIAL SYSTEM
INDIAN FINANCIAL SYSTEMINDIAN FINANCIAL SYSTEM
INDIAN FINANCIAL SYSTEM
 
Capital market ppt
Capital market pptCapital market ppt
Capital market ppt
 
The Financial Environment
The Financial EnvironmentThe Financial Environment
The Financial Environment
 
capital marketing about all businesses and assets
capital marketing about all businesses and assetscapital marketing about all businesses and assets
capital marketing about all businesses and assets
 
Primary market and secondary market
Primary market and secondary marketPrimary market and secondary market
Primary market and secondary market
 
Brief Introduction on Indian financial markets
Brief Introduction on Indian financial marketsBrief Introduction on Indian financial markets
Brief Introduction on Indian financial markets
 
money and capital markets CASES REPORT.pdf
money and capital markets CASES REPORT.pdfmoney and capital markets CASES REPORT.pdf
money and capital markets CASES REPORT.pdf
 

More from rastogiarun

Explain briefly the system of system of the Balance of Payments Acco.pdf
Explain briefly the system of system of the Balance of Payments Acco.pdfExplain briefly the system of system of the Balance of Payments Acco.pdf
Explain briefly the system of system of the Balance of Payments Acco.pdf
rastogiarun
 
Explain how convection and radiation terms are included in the funda.pdf
Explain how convection and radiation terms are included in the funda.pdfExplain how convection and radiation terms are included in the funda.pdf
Explain how convection and radiation terms are included in the funda.pdf
rastogiarun
 
Explain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdf
Explain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdfExplain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdf
Explain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdf
rastogiarun
 
Explain the relevance of a rate reconciliation in a tax provision. W.pdf
Explain the relevance of a rate reconciliation in a tax provision. W.pdfExplain the relevance of a rate reconciliation in a tax provision. W.pdf
Explain the relevance of a rate reconciliation in a tax provision. W.pdf
rastogiarun
 
Explain how confusing the two (population and a sample) can lead to .pdf
Explain how confusing the two (population and a sample) can lead to .pdfExplain how confusing the two (population and a sample) can lead to .pdf
Explain how confusing the two (population and a sample) can lead to .pdf
rastogiarun
 
Explain the origins of the U.S. judicial system and how the judicial.pdf
Explain the origins of the U.S. judicial system and how the judicial.pdfExplain the origins of the U.S. judicial system and how the judicial.pdf
Explain the origins of the U.S. judicial system and how the judicial.pdf
rastogiarun
 
Explain the Mutiplier Effect. Try to explain it in some detail so th.pdf
Explain the Mutiplier Effect. Try to explain it in some detail so th.pdfExplain the Mutiplier Effect. Try to explain it in some detail so th.pdf
Explain the Mutiplier Effect. Try to explain it in some detail so th.pdf
rastogiarun
 
Explain the environmental triggers that forces companies to adopt su.pdf
Explain the environmental triggers that forces companies to adopt su.pdfExplain the environmental triggers that forces companies to adopt su.pdf
Explain the environmental triggers that forces companies to adopt su.pdf
rastogiarun
 

More from rastogiarun (20)

Explain briefly the system of system of the Balance of Payments Acco.pdf
Explain briefly the system of system of the Balance of Payments Acco.pdfExplain briefly the system of system of the Balance of Payments Acco.pdf
Explain briefly the system of system of the Balance of Payments Acco.pdf
 
Explain how convection and radiation terms are included in the funda.pdf
Explain how convection and radiation terms are included in the funda.pdfExplain how convection and radiation terms are included in the funda.pdf
Explain how convection and radiation terms are included in the funda.pdf
 
Explain how academic knowledge impacts the social elements and insti.pdf
Explain how academic knowledge impacts the social elements and insti.pdfExplain how academic knowledge impacts the social elements and insti.pdf
Explain how academic knowledge impacts the social elements and insti.pdf
 
Explain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdf
Explain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdfExplain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdf
Explain the results of the Judge, Ilies, Bono, and Gerhardt review. .pdf
 
Explain the relevance of a rate reconciliation in a tax provision. W.pdf
Explain the relevance of a rate reconciliation in a tax provision. W.pdfExplain the relevance of a rate reconciliation in a tax provision. W.pdf
Explain the relevance of a rate reconciliation in a tax provision. W.pdf
 
Explain the relationship between system implementation and a systems.pdf
Explain the relationship between system implementation and a systems.pdfExplain the relationship between system implementation and a systems.pdf
Explain the relationship between system implementation and a systems.pdf
 
Explain how a manufacturerSolutionDistribution involves gettin.pdf
Explain how a manufacturerSolutionDistribution involves gettin.pdfExplain how a manufacturerSolutionDistribution involves gettin.pdf
Explain how a manufacturerSolutionDistribution involves gettin.pdf
 
Explain how confusing the two (population and a sample) can lead to .pdf
Explain how confusing the two (population and a sample) can lead to .pdfExplain how confusing the two (population and a sample) can lead to .pdf
Explain how confusing the two (population and a sample) can lead to .pdf
 
Explain the process through which individuals with a certain set of .pdf
Explain the process through which individuals with a certain set of .pdfExplain the process through which individuals with a certain set of .pdf
Explain the process through which individuals with a certain set of .pdf
 
Explain the origins of the U.S. judicial system and how the judicial.pdf
Explain the origins of the U.S. judicial system and how the judicial.pdfExplain the origins of the U.S. judicial system and how the judicial.pdf
Explain the origins of the U.S. judicial system and how the judicial.pdf
 
Explain the organizational archetypes as described by Mintzberg and .pdf
Explain the organizational archetypes as described by Mintzberg and .pdfExplain the organizational archetypes as described by Mintzberg and .pdf
Explain the organizational archetypes as described by Mintzberg and .pdf
 
Explain the Mutiplier Effect. Try to explain it in some detail so th.pdf
Explain the Mutiplier Effect. Try to explain it in some detail so th.pdfExplain the Mutiplier Effect. Try to explain it in some detail so th.pdf
Explain the Mutiplier Effect. Try to explain it in some detail so th.pdf
 
Explain the main sources of power available to managers, giving exam.pdf
Explain the main sources of power available to managers, giving exam.pdfExplain the main sources of power available to managers, giving exam.pdf
Explain the main sources of power available to managers, giving exam.pdf
 
Explain the mechanisms of internal loading of phosphorus in lakes.pdf
Explain the mechanisms of internal loading of phosphorus in lakes.pdfExplain the mechanisms of internal loading of phosphorus in lakes.pdf
Explain the mechanisms of internal loading of phosphorus in lakes.pdf
 
Explain the main porpose of conducting a time studySolutionTi.pdf
Explain the main porpose of conducting a time studySolutionTi.pdfExplain the main porpose of conducting a time studySolutionTi.pdf
Explain the main porpose of conducting a time studySolutionTi.pdf
 
Explain the functions of the formal and informal organizationsand .pdf
Explain the functions of the formal and informal organizationsand .pdfExplain the functions of the formal and informal organizationsand .pdf
Explain the functions of the formal and informal organizationsand .pdf
 
Explain the environmental triggers that forces companies to adopt su.pdf
Explain the environmental triggers that forces companies to adopt su.pdfExplain the environmental triggers that forces companies to adopt su.pdf
Explain the environmental triggers that forces companies to adopt su.pdf
 
Explain the distinction between the standard deviation and the stand.pdf
Explain the distinction between the standard deviation and the stand.pdfExplain the distinction between the standard deviation and the stand.pdf
Explain the distinction between the standard deviation and the stand.pdf
 
Explain the different types of workforce flexibility that an organis.pdf
Explain the different types of workforce flexibility that an organis.pdfExplain the different types of workforce flexibility that an organis.pdf
Explain the different types of workforce flexibility that an organis.pdf
 
Explain age Hardening process used to strengthen an aluminium alloy .pdf
Explain age Hardening process used to strengthen an aluminium alloy .pdfExplain age Hardening process used to strengthen an aluminium alloy .pdf
Explain age Hardening process used to strengthen an aluminium alloy .pdf
 

Recently uploaded

Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in DelhiRussian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
kauryashika82
 
Making and Justifying Mathematical Decisions.pdf
Making and Justifying Mathematical Decisions.pdfMaking and Justifying Mathematical Decisions.pdf
Making and Justifying Mathematical Decisions.pdf
Chris Hunter
 

Recently uploaded (20)

General Principles of Intellectual Property: Concepts of Intellectual Proper...
General Principles of Intellectual Property: Concepts of Intellectual  Proper...General Principles of Intellectual Property: Concepts of Intellectual  Proper...
General Principles of Intellectual Property: Concepts of Intellectual Proper...
 
How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17
 
Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024
 
This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.
 
Unit-IV; Professional Sales Representative (PSR).pptx
Unit-IV; Professional Sales Representative (PSR).pptxUnit-IV; Professional Sales Representative (PSR).pptx
Unit-IV; Professional Sales Representative (PSR).pptx
 
Holdier Curriculum Vitae (April 2024).pdf
Holdier Curriculum Vitae (April 2024).pdfHoldier Curriculum Vitae (April 2024).pdf
Holdier Curriculum Vitae (April 2024).pdf
 
Advanced Views - Calendar View in Odoo 17
Advanced Views - Calendar View in Odoo 17Advanced Views - Calendar View in Odoo 17
Advanced Views - Calendar View in Odoo 17
 
Measures of Dispersion and Variability: Range, QD, AD and SD
Measures of Dispersion and Variability: Range, QD, AD and SDMeasures of Dispersion and Variability: Range, QD, AD and SD
Measures of Dispersion and Variability: Range, QD, AD and SD
 
On National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan FellowsOn National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan Fellows
 
ICT role in 21st century education and it's challenges.
ICT role in 21st century education and it's challenges.ICT role in 21st century education and it's challenges.
ICT role in 21st century education and it's challenges.
 
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
Explore beautiful and ugly buildings. Mathematics helps us create beautiful d...
 
Introduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The BasicsIntroduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The Basics
 
2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx
2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx
2024-NATIONAL-LEARNING-CAMP-AND-OTHER.pptx
 
Grant Readiness 101 TechSoup and Remy Consulting
Grant Readiness 101 TechSoup and Remy ConsultingGrant Readiness 101 TechSoup and Remy Consulting
Grant Readiness 101 TechSoup and Remy Consulting
 
Role Of Transgenic Animal In Target Validation-1.pptx
Role Of Transgenic Animal In Target Validation-1.pptxRole Of Transgenic Animal In Target Validation-1.pptx
Role Of Transgenic Animal In Target Validation-1.pptx
 
TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...
TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...
TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...
 
Ecological Succession. ( ECOSYSTEM, B. Pharmacy, 1st Year, Sem-II, Environmen...
Ecological Succession. ( ECOSYSTEM, B. Pharmacy, 1st Year, Sem-II, Environmen...Ecological Succession. ( ECOSYSTEM, B. Pharmacy, 1st Year, Sem-II, Environmen...
Ecological Succession. ( ECOSYSTEM, B. Pharmacy, 1st Year, Sem-II, Environmen...
 
Energy Resources. ( B. Pharmacy, 1st Year, Sem-II) Natural Resources
Energy Resources. ( B. Pharmacy, 1st Year, Sem-II) Natural ResourcesEnergy Resources. ( B. Pharmacy, 1st Year, Sem-II) Natural Resources
Energy Resources. ( B. Pharmacy, 1st Year, Sem-II) Natural Resources
 
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in DelhiRussian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
 
Making and Justifying Mathematical Decisions.pdf
Making and Justifying Mathematical Decisions.pdfMaking and Justifying Mathematical Decisions.pdf
Making and Justifying Mathematical Decisions.pdf
 

Explain briefly how secondary markets help facilitate capital format.pdf

  • 1. Explain briefly how secondary markets help facilitate capital formation (investment in real assets). Solution Capital formation takes place as a result of increase/addition in the existing level of capital stock such as buildings, equipment or other forms of real assets. Secondary markets donot directly contribute to the process of capital formation as is the case with primary markets. However, the transfer of capital from surplus spending units (SSUs) to deficit spending units (DSUs) through various financial intermediaries result in the formation of capital as DSUs are able to utilize such borrowed capital/funds for procuring assets. SSUs are mostly investors/lenders and DSUs are borrowers. In simple words, the process of borrowing money from from such lenders for the purpose of making investments in tangible assets (particularly fixed assets) facilitate capital formation in the secondary markets.