The document provides information on various aspects of the Indian capital market, including definitions of key terms like capital market, primary market, secondary market, and sources of long-term financing. It also discusses various capital market instruments like shares, debentures, term loans, leasing, hire purchase, venture capital, and private equity - outlining their meaning, types, advantages and disadvantages. The primary and secondary segments of the Indian capital market are described along with new issue market and stock market.

1. Meaning of Capital market:
• The term 'capital market' refers to the
institutional arrangements for facilitating
the borrowing and lending of long-term
funds.
Example: Equity share, Debenture, Bond etc

2. Definition of capital market:
• According to M.Y. Khan, "It is a
market for long-term funds. Its focus is
on financing of fixed investments in
contrast to money market which is the
institutional source of working capital
finance".

3. Capital market In India:

4. What are the Features of Indian Capital
Market?
• Securities Market
• Security Prices
• Participants
• Location

5. What are the functions of Capital Market?
• Liquidity Function
• Allocation Function
• Merger Function
• Transfer Function
• Indicative Function
• Savings and Investment Function

6. Primary Market:
• The primary market represents the new issue
market where new securities, i.e. shares or
bonds that have-never been previously issued,
are offered. Both the new companies and the
existing ones can raise capital on the new issue
market.

7. Secondary Market:
• The secondary market, also known as the 'aftermarket', is the
financial market where previously issued securities and
financial instruments such as stock, bonds, options and futures
are bought and sold. The term "secondary market" is also used
to refer to refer to the market for any used goods or assets or
an alternative use for an existing product or asset where the
customer base is the second market.

8. What are the Various Sources of Long term financing?
Term Loans
Retained Earnings
Debentures
Preference Shares
Equity Shares

9. What do you mean by shares?
• The capital of a company is divided into different units called Shares. A share
is the movable property of a shareholder and he has a liberty to transfer his share in
the manner prescribed by the Articles of the company. Its distinct number
distinguishes each share of a company.

10. Equity Shares
• Equity shares are, earlier, known as ordinary
shares or common shares. Equity shareholders
are the real owners of the company as they
have the voting rights and enjoy decision-
making authority on important matters, related
to the company.

11. What are the characteristics of equity shares?
• Maturity
• Claims / rights to income
• Claim on assets
• Right to control / voting rights
• Pre-emptive rights
• Limited liability

12. Advantages of equity shares:
• Advantage to investors
• Capital profit
• Interest in the company’s activities
• Best for investment
• More income
• Right to interfere in management
• Advantage to company
• No fixed burden of dividend
• No outflow of cash

13. Cont…
• Bear the risk
• Simple and cheap source
• Availability of fixed capital

14. Disadvantages of equity shares:
• Disadvantage to investors
• Uncertainty of income
• Irregular income
• Capital loss
• Less attractive to moderate investors
• Loss in the case of liquidation
• Disadvantage to company
• Difficult to remove over capitalization
• Centralization of control

15. Cont…
• Change in management policy
• Speculation

16. What do you mean be preference shares?
• The parts of corporate securities are called as
preference shares. It is the shares, which have
preferential right to get dividend and get back the
initial investment at the time of winding up of the
company. Preference shareholders are eligible to get
fixed rate of dividend and they do not have voting
rights.

17. Types of preference shares:
• Cumulative preference shares
• Non-cumulative preference shares
• Redeemable preference shares
• Irredeemable Preference Shares
• Participating Preference Shares
• Non-Participating Preference Shares
• Convertible Preference Shares
• Non-convertible Preference Shares

18. Advantages of Preference Shares
• Fixed dividend
• Cumulative dividends
• Redemption
• Participation
• Convertibility

19. Disadvantages of Preference Shares
• Expensive sources of finance
• No voting right
• Fixed dividend only
• Permanent burden
• Taxation

20. DEBENTURES
• A Debenture is a document issued
by the company. It is a certificate
issued by the company under its
seal acknowledging a debt.

21. Define debentures?
• According to the Companies Act 1956, “debenture
includes debenture stock, bonds and any other
securities of a company whether constituting a charge
of the assets of the company or not.”

22. What are the types of Debentures?
• Unsecured debentures
• Secured debentures
• Redeemable debentures
• Irredeemable debentures
• Convertible debentures

23. Advantages of Debenture
• Long-term sources
• Fixed rate of interest
• Trade on equity
• Income tax deduction
• Protection

24. Disadvantages of Debenture
• Fixed rate of interest
• No voting rights
• Creditors of the company
• High risk
• Restrictions of further issues

25. TERM LOANS
• Term loans, also referred to as term finance; represent a
source of debt finance which is generally repayable in
more than one year but less than 10 years. They are
employed to finance acquisition of fixed assets and
working capital margin. Term loans differ from short-term
bank loans which are employed to finance short-term
working capital need and tend to be self-liquidating over a
period of time, usually less than one year.

26. Features of Term Loan
• Security
• Interest Payment and Principal Repayment
• Restrictive Covenants

27. Retained earnings:
• Retained earnings refer to the percentage of
netearnings not paid out as dividends,
but retained by the company to be reinvested in its
core business, or to pay debt. It is recorded under
shareholders' equity on the balance sheet.

28. Constituents of Indian Capital Market
• New Issue Market
• Stock Market

29. Meaning of New Issue Market
• The primary market represents the
new issue market where new securities,
i.e. shares or bonds that have never been
previously issued, are offered. Both the
new companies and the existing ones
can raise capital on the new issue
market.

30. Functions of New Issue Market
• Origination
• Time of Floating of an Issue
• Type of Issue
• Price
• Underwriting
• Distribution

31. New Issue Market Activities
• Public Issue
• Rights Issue
• Private Placement
• Preferential Allotment

32. Meaning of Stock Market
• The secondary market, also known as the 'aftermarket', is the
financial market where previously issued securities and financial
instruments such as stock, bonds, options and futures are bought and
sold. The term "secondary market" is also used to refer to the market
for any used goods or assets or an alternative use for an existing
product or asset where the customer base is the second market (e.g.,
corn has been traditionally used primarily for food production and
feedstock, but a second - or third - market has developed for use in
ethanol production).

33. Functions of Stock Market
• Ensure Liquidity of Capital
• Continuous Market for Securities
• Evaluation of Securities
• Mobilizing Surplus Savings
• Helpful in Raising New Capital
• Safety in Dealings
• Listing of Securities
• Platform for Public Debt
• Clearing House of Business Information

34. Weaknesses of Stock Market
• Rampant Speculation
• Insider Trading
• Oligopolistic
• Limited Forward Trading
• Outdated Share Trading System
• Lack of a Single Market
• Problem of Interface between the Primary and Secondary Markets
• Inadequacy of Investor Service

35. LEASING
• Lease financing is one of the popular and common methods
of assets based finance, which is the alternative to the loan
finance. Lease is a contract. A contract under which one party,
the leaser (owner) of an asset agrees to grant the use of that
asset to another leaser, in exchange for periodic rental
payments.
• Lease is contractual agreement between the owner of the
assets and user of the assets for a specific period by a
periodical rent.

36. What are the elements of Leasing?
• Parties
• Leaser
• Lease
• Lease broker
• Lease assets

37. Explain the classification or types of
Leasing?
(A) Lease based on the term of lease
1. Finance Lease
2. Operating Lease
(A) ( Lease based on the method of lease
1. Sale and lease back
2. Direct lease
• (C) Lease based in the parties involved
• 1. Single investor lease
• 2. Leveraged lease
• (D) Lease based in the area
• 1. Domestic lease
• 2. International lease

38. What are the advantages of Leasing?
• Financing of fixed asset
• Assets based finance
• Convenient
• Low rate of interest
• Simplicity
• Transaction cost
• Reduce risk
• Better alternative

39. Explain Leasing Finance Institutions in India
Leasing Finance Institutions in India
Public sector Private sector
Leasing Leasing
Leasing by developed institutions
Leasing by specialized
institutions
Leasing company Finance company

40. What is Hire Purchase?
• Hire purchase means hiring of an asset for
a period of time and at the end of the
period, purchasing the same. Actually, this
is time sharing of the asset - the person
hiring the asset acquires its possession and
the right to use it. As a legal device it is
being used for financing of capital goods
such as industrial finance, financing of
consumer goods and for selling consumer
good on hire purchase.

41. Advantages of Hire Purchase
• Higher Realized Income
• Low NPAs
• Fewer Defaulters
• Recycle Recovered Funds

42. Disadvantages of Hire Purchase
• Encourages Lavish Expenditure
• Future Income is Mortgaged
• Higher Installment Price
• Difficulty in Re-sale of Goods

43. What is Venture Capital?
• Venture capital refers to an
equity/equity-related investment in a
growth-oriented small/medium business
to enable the investors to accomplish
corporate objectives, in return for
monetary shareholding in the business
or the irrevocable right to acquire it.
Venture capital is a typical 'private
equity investment'.

44. Features of Venture Capital Financing
• New Ventures
• Continuous Involvement
• Mode of Investment
• Objective
• Hands-On Approach
• High Risk-Return Ventures
• Nature of Firms
• Liquidity

45. PRIVATE EQUITY
• Equity capital that is not quoted on a public exchange is called
private equity. Private equity consists of investors and funds
that make investments directly into private companies or
conduct buyouts of public companies that result in a delisting
of public equity. Capital for private equity is raised from retail
and institutional investors, and can be used to fund new
technologies, expand working capital within an owned
company, make acquisitions, or to strengthen a balance sheet.

46. Process of Private Equity Financing
Fund Formation
Stage
Investment Stage
Management Stage
Exit Stage

47. Advantages of Private Equity
• Substantial Liquidity
• Growth Capital
• Eliminate Personal Guarantees and Retain Operational
Control
• Obtain a Strong Partner with Aligned Goals
• "Second Bite at the Apple"

48. Disadvantages of Private Equity
• Debt Burden
• Board Seats
• Required Exit Strategy