Need of new Financial Instruments, New Financial Instruments, Global Depository Receipts (GDRs), Advantages, ADR, Zero Coupon Debenture, Deep Discount Bonds, Infrastructure bonds, Floating rate bonds, Municipal bonds, Regular income bonds, Retirement bonds, Growth bonds etc. नए वित्तीय साधनों, नए वित्तीय साधनों, वैश्विक डिपॉजिटरी प्राप्तियों (जीडीआर), लाभ, एडीआर, जीरो कूपन डिबेंचर, डीप डिस्काउंट बांड, इन्फ्रास्ट्रक्चर बॉन्ड, फ्लोटिंग रेट बॉन्ड, म्यूनिसिपल बॉन्ड, रेगुलर इनकम बॉन्ड, रिटायरमेंट बॉन्ड, ग्रोथ बॉन्ड आदि की जरूरत है। Part-1 link: https://youtu.be/BnhujbYLwO4 Make sure to like and share the video. Your support and love is very important to me. Follow me on slideshare: https://www.slideshare.net/GitanjaliJindal Disclaimer- Some contents are used for educational purpose under fair use. Copyrights Disclaimer under Section 107 of the Copyright Act 1976, allowance is made for: fair use" for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. Fair use is a use permitted by copyright statute that might otherwise be infringing. All credit for copyright material used in video goes to respected owner.

1. Capital Market Instruments
Dr. Gitanjali Jindal

2. CAPITALMARKET NSTRUMENTS

3. EQUITYSHARES
 According to the Companies Act 1956, equity shares are that part of the
share capital of the company, which are not preference shares.
 They are called as ordinary shares or common stock or voting share.
 These shareholder are the real owner of the company.
 The return on equity shares depends on the performance
profitability of the company.

4. MERITS OF EQUITYSHARES
 A permanent source of finance to the company
 No fixed rate of dividend
 Easy liquidity and marketability

5. LIMITATIONS OF EQUITY SHARES
 No guarantee on returns to shareholders
 Loss of managerial control

6. Different names of Equity Share
 Blue chip Shares
 Active share
 Specified or cleared or alpha shares
 Growth share
 Defensive share
 Turn around shares
 Cyclical shares( prices are affected by the trade cycle)
 Non cyclical shares( basic stuff, consumer Products)

7. Buy back of shares- The company purchase its own
shares from the shareholders
 Objectives of buy back
 To reduce company equity base
 To prevent takeover bids
 To return surplus cash to shareholders
 To boost share prices during periods of temporary slump
 To maintain proper capital structure of the company

8. PREFERENCE SHARES
 Preference shares are known as preferred stock.
 Preference share capital has two priorities i.e., in the repayment of
capital and payment of dividend.
 Preferred stocks usually carry no voting rigths.

9. TYPES OF PREFERENCESHARE

10. MERITS OF PREFERENCE SHARE CAPITAL
Company point of view
•No burden on finances of the company
•Acquiring long term capital
•Retention of control
•Repayment possible if no need of funds
•Possibility of trading on equity
•Enhancement in creditworthiness
Investors point of view
•Regular income
•Safety
•Interference in management

11. Demerits
Company point of view
•Costly method of finance
•Problem in flexibility of company
•Adverse effect on creditworthiness
Investors point of view
•Unsurity about income
•Lower income
•Less secure
•Fluctuation in prices

12.  A debenture is an acknowledgement of debt by a company under its seal.
 When a corporation is in need of fund in addition to share capital it
borrows money by issuing debentures.
 The debenture holder gets interest which is fixed at the time of issue.
DEBENTURES

13. Features of debentures
 Fixed interest bearing security
 Fixed maturity
 Preference in repayment
 No participation in management

14. Redeemable
or
irredeemable
Convertible
or non-
convertible
Secured
or
unsecured
Bearer
or
registered
TYPES OF DEBENTURES

15. Merits
Company point of view
•Retention of control
•Lower and fixed rate of interest
•Long term funds
•Possibility of trading on equity
•Flexibility in capital structure
Investors point of view
•Security
•Regular income
•liquidity

16. Demerits
Company point of view
•A fixed charges
•Need to offer security
•High stamp duty
•Loss of creditworthiness
Investors point of view
•No say in management of the company
•Risk
•Taxability of interest
•No claim on surplus assets
•Fluctuation in value

17. Need of new Financial Instruments
1. Decline in interest rate
2. To boost up investment environment
3. Capital market as a source of financial
4. Scams
5. Maturity period

18. New Financial Instruments
1. Global Depository receipts
2. ADR
3. Zero Coupon debenture
4. Deep discount bonds
5. Infrastructure bonds
6. Floating rate bonds
7. Municipal bonds
8. Regular income bonds
9. Retirement bonds
10.Growth bonds

19. Global Depository Receipts (GDRs)
GDR are instruments which are issue by overseas depository banks and
represent equity shares of Indian companies. This is the method through
which Indian companies accesses global markets. An Indian companies
which wants its security to be bought and sold in the international market
approaches an overseas depository bank which issues securities depository
receipts to purchasers of these securities in foreign countries in foreign
currencies.

20. Advantages
1. Share price of the company stable because of widening of the market.
2. Image
3. Not any foreign exchange risk
4. Mobilize fund from abroad
5. International diversification
6. Liquidity
7. Attract the foreign investors because they offer greater returns

21. ADR
It is a instrument traded in US stock exchanges. These are issue against
the security of Indian companies through an American depository bank. It
is a method through which securities of Indian companies are bought and
sold in USA, their prices are expressed in US dollars.

22. ADRs and GDRs are an excellent means of investment for NRIs and
foreign nationals wanting to invest in India. By buying these, they can
invest directly in Indian companies without going through the hassle of
understanding the rules and working of the Indian financial market–since
ADRs and GDRs are traded like any other stock, NRIs and foreigners
can buy these using their regular equity trading accounts!
Ex-HDFC Bank, ICICI Bank, Infosys have issued both ADR and GDR

23. Zero Coupon Debenture
A zero-coupon bond is a debt security instrument that does not pay
interest. Zero-coupon bonds trade at deep discounts, offering full face
value (par) profits at maturity.
The difference between the purchase price of a zero-coupon bond and
the par value, indicates the investor's return.

24. The par or face value of a corporate bond is typically stated as
$1,000. If a corporate bond is issued at a discount, this means
investors can purchase the bond below its par value. For
example, an investor who purchases a bond at a discount for
$920 will receive $1,000. The $80 return, coupon payments
received on the bond, is the investor's earnings or return for
holding the bond.

25. Deep Discount Bonds
A bond that sells at a significant discount from par value and has no coupon
rate or lower coupon rate than the prevailing rates of fixed-income
securities with a similar risk profile. They are designed to meet the long
term funds requirements of the issuer and investors who are not looking for
immediate return and can be sold with a long maturity of 25-30 years at a
deep discount on the face value of debentures.
Ex-IDBI deep discount bonds for Rs 1 lac repayable after 25 years were
sold at a discount price of Rs. 2,700.

26. Infrastructure bonds
Are invested in government funded infrastructure projects within a
country. They are issued by governments or government
authorized Infrastructure companies or Non- Banking Financial
Companies.

27. Floating rate bonds
Floating rate bonds, unlike fixed rate, have a variable coupon that will alter
throughout the period until it matures. These floating rate coupons are reset,
usually every quarter, to a specified amount over a reference rate. One of
the most common reference rates to use as the basis for
applying floating interest rates is the London Inter-bank Offered Rate,
or LIBOR (the rates at which large banks lend to each other).
Typically, floating rate loans will cost less than fixed rate loans

28. Municipal bonds
Municipal bonds ("munis") are debt securities issued by state and local
governments. These can be thought of as loans that investors make to local
governments, and are used to fund public works such as parks, libraries,
bridges & roads, and other infrastructure. The only real disadvantage of
municipal bonds is that they carry relatively low interest rates compared to
other types of securities.

29. Regular income bonds
A Regular Income Bond is a bond, which pays you interest regularly say,
annually, half-yearly etc.. It is designed to meet the needs of people who
want.

30. Retirement bonds
These bonds are issued for the persons who wish to get the installments
of fixed amount after their retirement. Investor gets the monthly fixed
amount after the expiry of the waiting period which is at the option of
the investor.

31. Growth bonds
Growth and income funds pursue both capital appreciation and current
income, i.e., dividends and interest from bonds.