This document provides an overview of capital markets and various investment instruments, including: 1) Equity investments such as stocks, mutual funds, and venture capital. Bonds are also discussed as a type of fixed-income investment where the issuer owes the holder interest payments and repayment of principal. 2) Other financial instruments include deposits in bank accounts, cash equivalents like money market holdings, and commodities like gold. 3) Non-financial instruments for investment include real estate (to generate rental income and capital appreciation) and other assets like precious metals.

1. CAPITAL MARKETS

2. INTRODUCTION
 INVESTMENT IS THE COMMITMENT OF MONEY OR CAPITAL TO PURCHASE
FINANCIAL INSTRUMENTS OR OTHER ASSETS.
 TO GAIN PROFITABLE RETURNS IN THE FORM
OF INTEREST, INCOME {DIVIDEND}, OR APPRECIATION OF THE VALUE OF THE
INSTRUMENT.
 IT IS RELATED TO SAVING OR DEFERRING CONSUMPTION. INVESTMENT IS
INVOLVED IN MANY AREAS OF THE ECONOMY, SUCH AS BUSINESS
MANAGEMENT AND FINANCE NO MATTER FOR HOUSEHOLDS, FIRMS, OR
GOVERNMENTS.
 AN INVESTMENT INVOLVES THE CHOICE BY AN INDIVIDUAL OR AN
ORGANIZATION SUCH AS A PENSION FUND, AFTER SOME ANALYSIS OR
THOUGHT, TO PLACE OR LEND MONEY IN A VEHICLE, INSTRUMENT OR ASSET,
SUCH AS PROPERTY, COMMODITY, STOCK, BOND, FINANCIAL
DERIVATIVES (E.G. FUTURES OR OPTIONS), OR THE FOREIGN ASSET
DENOMINATED IN FOREIGN CURRENCY, THAT HAS CERTAIN LEVEL OF RISK
AND PROVIDES THE POSSIBILITY OF GENERATING RETURNS OVER A PERIOD OF
TIME.

3. FINANCIAL INSTRUMENTS
EQUITY INVESTMENTS
 AN EQUITY INVESTMENT GENERALLY REFERS TO THE
BUYING AND HOLDING OF SHARES OF STOCK ON A
STOCK MARKET BY INDIVIDUALS AND FIRMS IN
ANTICIPATION OF INCOME FROM DIVIDENDS AND
CAPITAL GAINS, AS THE VALUE OF THE STOCK RISES.
 IT MAY ALSO REFER TO THE ACQUISITION OF EQUITY
(OWNERSHIP) PARTICIPATION IN A PRIVATE (UNLISTED)
COMPANY OR A STARTUP COMPANY.
 WHEN THE INVESTMENT IS IN INFANT COMPANIES, IT IS
REFERRED TO AS VENTURE CAPITAL INVESTING AND IS
GENERALLY UNDERSTOOD TO BE HIGHER RISK THAN
INVESTMENT IN LISTED GOING-CONCERN SITUATIONS.

4. MUTUAL FUNDS
 A MUTUAL FUND IS A PROFESSIONALLY
MANAGED TYPE OF COLLECTIVE
INVESTMENT SCHEME THAT POOLS
MONEY FROM MANY INVESTORS AND
INVESTS TYPICALLY IN INVESTMENT
SECURITIES (STOCKS, BONDS, SHORT-TERM
MONEY MARKET INSTRUMENTS, OTHER
MUTUAL FUNDS, OTHER SECURITIES,
AND/OR COMMODITIES SUCH AS
PRECIOUS METALS).
 THE MUTUAL FUND WILL HAVE A FUND
MANAGER THAT TRADES (BUYS AND
SELLS) THE FUND'S INVESTMENTS IN
ACCORDANCE WITH THE FUND'S
INVESTMENT OBJECTIVE.

5. BONDS
 IN FINANCE, A BOND IS A DEBT SECURITY, IN
WHICH THE AUTHORIZED ISSUER OWES THE
HOLDERS A DEBT AND, DEPENDING ON THE TERMS
OF THE BOND, IS OBLIGED TO PAY INTEREST (THE
COUPON) AND/OR TO REPAY THE PRINCIPAL AT A
LATER DATE, TERMED MATURITY.
 A BOND IS A FORMAL CONTRACT TO REPAY
BORROWED MONEY WITH INTEREST AT FIXED
INTERVALS.
 BONDS AND STOCKS ARE BOTH SECURITIES, BUT
THE MAJOR DIFFERENCE BETWEEN THE TWO IS
THAT (CAPITAL) STOCKHOLDERS HAVE AN EQUITY
STAKE IN THE COMPANY (I.E., THEY ARE
OWNERS), WHEREAS BONDHOLDERS HAVE A
CREDITOR STAKE IN THE COMPANY (I.E., THEY ARE
LENDERS).

6. DEPOSITS
 A DEPOSIT ACCOUNT IS A
CURRENT ACCOUNT,
SAVINGS ACCOUNT, OR
OTHER TYPE OF BANK
ACCOUNT, AT A BANKING
INSTITUTION THAT ALLOWS
MONEY TO BE DEPOSITED
AND WITHDRAWN BY THE
ACCOUNT HOLDER.
 BANKS PAY THE CUSTOMER
INTEREST ON THE FUNDS
DEPOSITED.

7. CASH EQIVALENTS
 CASH AND CASH EQUIVALENTS
ARE THE MOST LIQUID ASSETS
FOUND WITHIN THE ASSET
PORTION OF A COMPANY'S
BALANCE SHEET.
 CASH EQUIVALENTS ARE ASSETS
THAT ARE READILY
CONVERTIBLE INTO CASH, SUCH
AS MONEY MARKET HOLDINGS,
SHORT-TERM GOVERNMENT
BONDS OR TREASURY BILLS,
MARKETABLE SECURITIES AND
COMMERCIAL PAPER.

8. NON - FINANCIAL
INSTRUMENTS
REAL ESTATE
 REAL ESTATE IS A LEGAL TERM THAT
ENCOMPASSES LAND ALONG WITH
IMPROVEMENTS TO THE LAND, SUCH AS
BUILDINGS & OTHER SITE.
 REAL ESTATE INVESTMENT INVOLVES THE
COMMITMENT OF FUNDS TO PROPERTY WITH
AN AIM TO GENERATE INCOME THROUGH
RENTAL OR LEASE AND TO ACHIEVE
CAPITAL APPRECIATION.
 ONE CAN OPT FOR REAL ESTATE
INVESTMENT WITH AN AIM TO RENT THE
PROPERTY OUT TO A TENANT.
 THE OWNER (LANDLORD) EARNS A
CONTINUOUS STREAM OF RENT FROM THE
TENANT.

9. GOLD
 OF ALL THE PRECIOUS METALS,
GOLD IS THE MOST POPULAR AS AN
INVESTMENT.
 INVESTORS GENERALLY BUY GOLD
AS A HEDGE OR SAFE HAVEN
AGAINST ANY ECONOMIC,
POLITICAL, SOCIAL, OR FIAT
CURRENCY CRISES.
 THE GOLD MARKET IS ALSO SUBJECT
TO SPECULATION AS OTHER
COMMODITIES ARE, ESPECIALLY
THROUGH THE USE OF FUTURES
CONTRACTS AND DERIVATIVES.

10. CORPORATE DEBT MARKET
 MARKET WHERE FIXED INCOME
SECURITIES OF VARIOUS TYPES AND
FEATURES ARE ISSUED AND TRADED IS
CALLED DEBT MARKET.
 GOVERNMENT SECURITIES SUCH AS
TREASURY BILLS, ZERO COUPON ETC.
 PUBLIC SECTOR BONDS:SUCH BONDS
ISSUED BY THE PUBLIC SECTOR
ENTITIES LIKE GOVERNMENT AGENCY.
INSTRUMENT ISSUED ARE PSU BONDS,
DEBENTURES. ETC.

11.  PRIVATE SECTOR BONDS:
BONDS ISSUED BY PRIVATE
SETOR ENTITIES SUCH AS
COMPANIES, BANKS.
FINANCIAL SECURITIES
ISSUED ARE DEBENTURE
BONDS,COMMERCIAL PAPER
ETC.
 INVESTMENT IS FIXED
INCOME SECURITIES IS
PROFITABLE TO INVESTORS
AND BANKS.
 ENSURE STEADY AND
CONSTANT RETURN BY
INTEREST AND REPAYMENT
OF PRINCIPAL OF MATURITY
OF THE INSTRUMENT.

12. FEATURES
 FACILITATES MOBILIZATION OF
RESOURCES AT A REASONABLE
COST.
 PROVIDES GREAT FUNDING AVENUE
TO THE PUBLIC AN PRIVATE SECTOR
PROJECTS.
 FACILITATES THE EFFICIENT
LIQUIDITY MANAGEMENT IN TUNE
WITH THE OVERALL SHORT TERM
AND LONG TERM OBJECTIVES OF
ECONOMIC PLANNING.
 PRICE IS DETERMINED IN THE
MARKET BY OPERATION OF THE
FORCES OF DEMAND AND SUPPLY
YIELD.

13.  NEW INSTRUMENTS
ARE ISSUED IN THE
PRIMARY MAKET.
 MARKET FOR BONDS
AND SECURITIES
BOUGHT AND SOLD IS
CALLED SECONDARY
MARKET.
 SECURITIES ALREADY
ISSUED ARE TRADED
IN THE MARKET.

14.  WHOLESALE DEBT
MARKET COMPRISES OF
INSTITUTIONS AND
AGENCY SUCH AS
BANKS, RBI,PROVIDENT
FUNDS ETC.
 THE 2 TYPES OF
TRANSACTIONS ARE
EXECUTED IN A
WHOLESALE DEBT
MARKET. IE. AN
OUTRIGHT SALE OR
PURCHASE AND REPO
TRADE.
 THE RETAIL DEBT
COMPRISES INDIVIDUAL
INVESTORS AND OTHER
LEGAL ENTITIES.

15.  DEBT INSTRUMENTS ARE
EXPOSED TO DIFFERENT TYPES
OF RISKS:
 DEFAULT OR CREDIT RISK:
RISK OF INABILITY OF THE
ISSUER TO MAKE PROMPT
PAYMENT OF THE INTEREST
AND PRINCIPAL AMOUNT.
 INTEREST RATE RISK: RISK
EMERGING FROM AN ADVERSE
CHANGE IN THE RATE OF
INTEREST PREVALENT IN THE
MARKET SO AS TO AFFECT THE
YIELD ON THE EXISTING
INSTRUMENT.

16.  PRICE RISK: RISK ARISING
FROM THE POSSIBILITY OF
NOT BEING ABLE TO RECEIVE
THE EXPECTED MARKET
PRICE OF THE DEBT
INSTRUMENT, DUE TO AN
ADVERSE MOVEMENT IN
PRICE.
 COUNTER PARTY RISK: RISH
WHICH ARISES FROM THE
FAILURE OR THE INABILITY
OF THE ISSUER TO DELIVER
EITHER THE PROMISED
SECURITY OR THE SALES
PRICE AT THE TIME OF
SETTLEMENT.

17. ABOUT STOCK EXCHANGES
 BY END OF MARCH 2001,
THERE WERE 24 STOCK
EXCHANGES IN NDIA.
 20 WERE REGIONALS
ONES WHILE THE OTHER
4 OPERATE AT
NATIONAL LEVEL.
 NSEIL, OTCEIL, ISE,BSE
OPERATE AT NATIONAL
LEVEL.

18. STOCK EXCHANGE TERMS
BULL
 BULL IS A SPECULATOR ON THE
STOCK EXCHANGE WHO EXPECTS
A RISE IN PRICE OF A CERTAIN
SECURITY.
 HE BUYS THE SECURITY WITHOUT
TAKING ACTUAL DELIVERY TO
SELL IT IN THE FUTURE WHEN
PRICE GOES UP
 IT IS CALLED “TEJIWALA”
 IT IS A MARKET IN WHICH THE
PRICES ARE RISING AS PER THE
EXPECTATION OF THE BULL
SPECULATOR.

19. BEAR
 IS A SPECULATOR ON THE STOCK
EXCHANGE.
 HE EXPECTS THE FALL IN PRICE OF
SECURITIES.
 IN ORDER TO TAKE BENEFIT OF THE
FUTURE SITUATION, HE AGREES TO SLELL
FOR DELIVERY ON THE FIXED DATE
SECURITIES WHICH ARE NOT IN
POSSESSION.
 BEFORE THE DELIVERY DATE,HE
PURCHASES AT A LOWER RATE AND SEELS
AT A HIGHER RATE TO EARN PROFITS.
 A BEAR IS CALLED “MANDIWALA”ON
BSE.

20. SPECULATION
 SPECULATION IS AN ANTI-SOCIAL
ACTIVITY UNDERTAKEN TO EARN
PROFIT.
 SPECULATOR ESTIMATES A FUTURE
POSSIBLE TREND IN THE STOCK
EXCHANGE AND MAKES
TRANSACTION IN THE PRESENT
PERIOD.
 SPECULATION UPTO A LIMIT
MAKES THE MARKET ACTIVE.
 IT NEEDS EFFECTIVE CONTROL FOR
HEALTHY GROWTH OF SHARE AND
PROTECTION OF GENUINE
INVESTORS.

21. SCRIPT-LESS TRADING
 MEANS TRADING IN ELECTRONIC
SHARES, WHERE THERE ARE NO
CERTIFICATES.
 SUCH TRADING IS SAFE, QUICK
AND BENEFICIAL IN INVESTORS.
DEMATERIALIZATION
 PROCESS BY WHICH AN INVESTOR
GETS HIS CERTIFICATE
CONVERTED INTO ELECTRONIC
SHARES MAINTAINED IN HIS A/C
WITH THE PARTICIPANT IN
DEPOSITORY SYSTEM.

22. INDEX
 A BASKET OF SECURITIES AND
AVERAGE PRICE MOVEMENT OF THE
BASKET OF SECURITIES INDICATES
THE INDEX MOVEMENT WHETHER
UPWARDS OR DOWNWARDS.
 IT SHOWS HOW A SPECIFIC
PORTFOLIO OF SHARE PRICES IS
MOVING IN ORDER TO GIVE AN
INDICATION OF MARKET TRENDS.
DEPOSITORY
 LIKE A BANK WHERE IN THE
DEPOSITS ARE SECURITIES.IE.
SHARES, DEBENTURES ARE KEPT IN
ELECTRONIC FORM

23. SCRIPT
 IS A SECURITY WHICH INCLUDES
INSTRUMENTS SUCH AS SHARES,
DEBENTURES OR BONDS.
MARKET CAPITALIZATION
 IS THE MARKET VALUE OF A QUOTED
COMPANY WHICH IS CALCULATED
BY MULTIPLYING ITS CURRENT
SHARE PRICE BY NUMBER OF SHARES
IN ISSUE.
CONTRACT NOTE
 IS A CONFIRMATION OF TRDES DONE
ON A PARTICULAR DAY ON BEHALF
OF A CLIENT BY A BROKER.

24. BOOK BUILDING
•IS BASICALLY A
MECHANISM WHERE
DURING THE PERIOD
FOR WHICH AN IPO IS
OPEN, BIDS ARE
COLLECTED FROM
INVESTORS AT VARIOUS
PRICES, WHICH IS OVER
AND ABOVE THE FLOOR
PRICE.

25. LISTING OF SECURITIES
ADMISSION OF SECURITY OF A
COMPANY TO TRADING
PRIVILEGES(DEALING) ON A STOCK
EXCHANGE THROUGH A FORMAL
AGREEMENT.
DELISTING OF SECURITIES
 PERMANENT REMOVAL OF A
SECURITY OF A LISTED COMPANY.
AFTER DELISTING, THE
COMPANY’S SECURITY IS NOT
TRADED.

26. ROLLING SETTLEMENT
 TRADES DONE BY A BROKER IN SECURITIES IN COMPULSORY
ROLLING SETTLEMENT ARE NOW SETTLED ON THE
EXCHANGE BY PAYMENT AND DELIVERY OF SECURITIES ON
T+2 BASIS.
CLEARING COOPERATION
 IS A PART OF THE EXCHANGE OR A SEPARATE ENTITY
WHICH PERFORMS 3 FUNCTIONS:
 CLEARS AND SETTLES ALL TRANSACTIONS
 FINANCIAL GUARANTEE FOR ALL TRANSACTIONS
EXECUTED.
 PROVIDES RISK MANAGEMENT FUNCTIONS

27. BOLTS
 TRADING ON BSC WAS
AUTOMATED WITH THE
COMMISSIONING OF THE
BROKER’S ON LINE
TRADING SYSTEM(BOLTS)
SINCE 1995.
 A BROKERS OFFICE IS
CONNECTED WITH THE
CENTRAL COMPUTER
THROUGH VERY-SMALL
APERTURE TERMINALS(VATs).
 COMPUTERIZED TRADING
SYSTEM WAS DEVELOPED BY
CMC LTD. USING UNIX-
BASED SOFTWARE IN 1996.

28. BOMBAY STOCK EXCHANGE
(BSE)
 OLDEST STOCK
EXCHANGE IN INDIA
WITH A HISTORY OF
MORE THAN 125 YEARS.
 ESTABLISHED BY
“NATIVE SHARE AND
STOCK BROKERS”
ASSOCIATION IN 1875
 MOST ACTIVE WITH
MORE THAN 70 %
TRANSACTION IN THE
COUNTRY TAKE PLACE
HERE.

29.  HAS THE LARGEST NUMBER
OF LISTED COMPANIES OF
MORE THAN 10000 ON THE
TRADING LIST.
 THE SCRIPTS HAVE BEEN
PUT UNDER CATEGORIES.
 THESE SCRIPTS ARE
GROUPED DEPENDING
UPON THEIR TRADING
VOLUME AND LIQUIDITY
 IT HAS THE WIDTH AND CATEGORY
DEPTH OF THE MARKETS
FOR EQUITY WITH THE A
LARGEST NUMBER OF B1
SCRIPTS
B2
Z

30. BSE INDEX(SENSEX)
 BSE STARTED COMPILING
AND PUBLISHING SENSITIVE
INDEX NUMBER OF EQUITY
PRICES FROM 1986 WITH BASE
YEAR 1978-79.
 30 COMPANIES FROM BOTH
“SPECIFIED” AND “NON
SPECIFIED” GROUPS WERE
SELECTED ON BASIS OF
CAPITALIZATION WITH DUE
REPRESENTATION TO THE
MAJOR INDUSTRIES.

31.  INDEX IS CALCULATED AS
THE %OF AGGREGATE
MARKET VALUE OF EQUITY
OF ALL COMPANIES IN THE
SAMPLE ON THAT DAY TO
THE AVERAGE MARKET
VALUE OF THE EQUITY OF
THE SOURCE COMPANY
DURING BASE YEAR.
 INVESTORS USE SENSEX AS
A BENCHMARK AGAINST
WHICH THEY VALUATE
THEIR PORTFOLIOS.
 THE INDEX DISPLAYS THE
CURRENT INDEX, OPENING
INDEX, INDEX HIGH, ETC.

32. • THE INDEX IS CALCULATED AT REGULAR INTERVALS
AND LATEST VALUE IS DISPLAYED.
• THE FOLLOWING INDICES MAINTAINED BY BSE ARE
DISPLAYED:
CONSUME
SENSEX R
DURABLES
CAPITAL
BSE 100
GOODS
BSE 200 PSU
TECHNOLO
BSE 500
GY
FMCG TRCK
HEALTH
BANKEX
CARE

33. NATIONAL STOCK
EXCHANGE (NSE)
 FORMED IN 1994.
 SLOWLY BECOMING THE
LEADING STOCK
EXCHANGE IN TERMS OF
TECHNOLOGY, SYSTEMS
AND PRACTICES IN DUE
COURSE OF TIME.
 ON THE 1ST DAY OF NSE
TRADING , DEALS WORTH
RS.2.4 CRORE WERE
COMPLETED.
 IT BOOSTS SCREEN BASED
TRADING SYSTEM.

34.  SET UP TO PROVIDE A
NATION WIDE STOCK
TRADING FACILITY TO
INVESTORS.
 IMPORTANT STEP IN
UPGRADING TRADING
FACILITIES AND
BRINGING THE INDIAN
FINANCIAL MARKETS IN
LINE WITH
INTERNATIONAL
MARKETS.
 IT ACTS LIKE A RETAIL
MARKET FOR EQUITIES,
DEBENTURES, ETC.

35.  IT PROVIDES NATIONWIDE SCREEN BASED
TRADING FACILITY AND EQUAL ACCESS TO
INVESTORS.
 IT IS THE FIRST EXCHANGE IN THE WORLD TO USE
SATELLITE COMMUNICATION TECHNOLOGY FOR
TRADING.
 ITS TRADING SYSTEM IS CALLED THE NATIONAL
EXCHANGE FOR AUTOMATED TRADING(NEAT).
 SPECIAL FEATURES:
 CENTRAL DEPOSITARY FUND
 NATIONAL CLEARING HOUSE
 COMMON SETTLEMENT AND TRADE CYCLES

36. BENEFITS OF NSE
 PRICE AND BROKERAGE
AND SEPARATELY SHOWN
ON CONTRACT NOTES.
 DATE AND TIME OF TRADE
INDICATED
 SYSTEM IS BETTER
MONITORED AND
REGULATED TO ENSURE
FAIR DEALS
 SAFETY OF SECURITIES IS
ENHANCED IN A
DEPOSITORY AND WILL BE
NO PROBLEMS OF BAD
DELIVERY LOSS, THEFT OR
FORGERY.

37. BENEFITS OF NSE TO
TRADING MEMBERS
 TRADING MEMBERS PROVIDE EFFICIENT
SERVICE TO THEIR CLIENTS.
 THEY TRADE FROM THEIR RESPECTIVE
OFFICE AND CAN MAKE USE OF FULL
BACK OFFICE SUPPORT FOR TRADING.
 NSE SYSTEM WILL PROVIDE THE BEST
PRICE TO THE PARTICIPANTS
 SYSTEM ENSURES FAIRNESS AMONGST
MEMBERS.

38. BENEFITS OF NSE TO
ISSUERS
• BY A SINGLE LISTING, THEY CAN PROVIDE
NATIONWIDE ACCESS TO THEIR
INVESTORS.
• AS A RESULT, THEIR LISTING COSTS ARE
REDUCED CONSIDERABLY.
• ISSUES WILL HAVE HIGH VISIBILITY.

39. NSE INDEX(NIFTY)
 NSE LAUNCHED ITS
EQUITY INDEX ON 23RD
NOVEMBER 1994.
 ITS KNOWN AS NSC 100
 IT WAS AN INTERIM INDEX
CONSISTED OF 100 EQUITY
SHARES OF COMPANY
NIFTY IS THE BAROMETER OF THE
WHICH ACCOUNTED 70% INDIAN MARKETS.
OF THE MARKET
CAPITALIZATION. IT IS MAINTAINED BY THE INDIAN
INDEX SERVICES AND PRODUCT
 THEREFORE IT DEVELOPED LTD. WHICH IS A JOINT VENTURE
A SCIENTIFICALLY 50 BETWEEN NSE AND CRISIL.
STOCK INDEX KNOWN AS
S&P CNX(NIFTY).

40. GROUP MEMBERS
 ANUJ AGRAWAL 51
 SANIKA BOHRA 06
 SANKET AGRAWAL 03
 ABHILASH PAGARIA 33
 HARSH SHAH 39
 SHASHANK VARMA 46