CLASS :12 ( COMMERCE) Subject - Business studies

MEANING:A FINANCIAL MARKET IS A MARKET FOR THE CREATION AND EXCHANGE OF FINANCIAL ASSETS, SUCH AS SHARES, DEBENTURES, BONDS , ETC.

IT MAIN AIM AT BRINGING TOGETHER BORROWERS AND LENDERS OF FUNDS.

FINANCIAL MARKET

1. Mobilizes funds. 2. Facilitates price discovery 3. Provides liquidity to financial assets 4. Reduces the cost of transaction

Functions of Financial Market

THERE ARE TWO MAJOR TYPES OF FINANCIAL MARKETS ARE

Capital market which deals in long-term and medium –term funds.

Financial market which deals in short term funds.

TWO MAJOR SEGMENTS

Treasury bill: Instrument of short term borrowing issued by the RBI on behalf of Indian Government

Commercial bill: Short term instrument used to finance working capital requirement of the business.

Commercial Paper: Unsecured instrument issued in the form of Promissory note.

Money Market Instruments

Certificate of Deposit(CD): Bearer document issued by commercial banks and development financial institutions against deposits kept by companies, individuals and institutions with them.

Call money: Short finance generally used by banks to maintain Cash Reserve Ratio(CRR).

Reserve Bank of India Non Banking Finance Companies Large Corporate Houses Commercial Banks State Government Mutual Funds

Participants of Money Market

Primary Capital Market: It refers to market where securities are sold for the first time.

Secondary Capital Market: It refers to market for sale and purchase of previously issued securities.

Types of Capital Market

There are different methods of floating new issues in the primary market.

Offer through Prospectus E-IPO Offer for Sale Private Placement Right Issue

Methods of FLOATATION

A stock exchange is an institution which provides a ready market for buying and selling of existing securities, i.e. , shares, Stocks, bonds, debentures ,etc.

Stock Exchange

Provides marketability and liquidity to existing securities

Pricing of Securities Safety of Transaction Contribution to economic growth Spreading equity cult

Its functions

Selection of a broker Opening D-mat account Placing order Execution of order Settlement

Trading Procedure

Security and exchange Board of India was setup in1992 to regain the trust of all investors and to protect their interests and to control and regulate business of stock exchange.

SEBI

To provide a fair, efficient and transparent security market

To enable shorter settlement cycle To meet modern global standards of

securities market. To introduce various reforms for proper

working of Indian Securities market

OBJECTIVES

Regulatory Functions Development Functions Protective Functions

FUNCTIONS of SEBI