Capital Market constitutes all financial institutions under banking system and the
securities market. This is the market place where financial investments (normally
of a long-term nature) can be acquired or disposed off. The term is used in the plural
to signify separate market segments for various types of financial investments. For
example, shares and bonds issued by business entities (companies) which are traded
at a Stock Exchange or Money Market, where acquiring or disposing of short-term
financial investments including inter-bank placement of very short-term deposits
and dealings in currencies is made.
MAJOR INSTRUMENTS TO INVEST IN THROUGH
STOCK EXCHANGE
When we invest money with a business entity, it can either be in
the capacity of becoming a partner in the business or we can lend
money to the business entity for a defined time period. When we
invest money in the business then we become the equity owners or
the shareholders, while if we lend money then we are the creditors
of that business. The must common types of securities are stocks
and bonds.
5.1 Stocks / Shares
When we participate in the ownership of the
business and have an equitable right in the
business to the extent of our share in it, we
become an "equity" or "share" holder. An equity investor is entitled to
distribution of profits and in the event the business is liquidated at some
stage, he is entitled to his share of the net assets left over. Stock or share,
as an equity instrument represents ownership insterest of the holders in their
corporate ventures.
5.2 Bonds
Bond as a debt instrument represents the promise of a issuer to pay a fixed
sum ofmoney at a specified maturity date and fixed return at regular intervals
until then.
At Stock Exchange, most of the trades are made in equity instruments, i.e.
stocks or shares issued by various companies.
securities market. This is the market place where financial investments (normally
of a long-term nature) can be acquired or disposed off. The term is used in the plural
to signify separate market segments for various types of financial investments. For
example, shares and bonds issued by business entities (companies) which are traded
at a Stock Exchange or Money Market, where acquiring or disposing of short-term
financial investments including inter-bank placement of very short-term deposits
and dealings in currencies is made.
MAJOR INSTRUMENTS TO INVEST IN THROUGH
STOCK EXCHANGE
When we invest money with a business entity, it can either be in
the capacity of becoming a partner in the business or we can lend
money to the business entity for a defined time period. When we
invest money in the business then we become the equity owners or
the shareholders, while if we lend money then we are the creditors
of that business. The must common types of securities are stocks
and bonds.
5.1 Stocks / Shares
When we participate in the ownership of the
business and have an equitable right in the
business to the extent of our share in it, we
become an "equity" or "share" holder. An equity investor is entitled to
distribution of profits and in the event the business is liquidated at some
stage, he is entitled to his share of the net assets left over. Stock or share,
as an equity instrument represents ownership insterest of the holders in their
corporate ventures.
5.2 Bonds
Bond as a debt instrument represents the promise of a issuer to pay a fixed
sum ofmoney at a specified maturity date and fixed return at regular intervals
until then.
At Stock Exchange, most of the trades are made in equity instruments, i.e.
stocks or shares issued by various companies.
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