Podcast
Questions and Answers
What is the primary role of the capital market in a country's economy?
What is the primary role of the capital market in a country's economy?
- To supply short-term credit only
- To eliminate the money market
- To ensure balanced and free flow of financial resources (correct)
- To regulate interest rates for savings
Which statement best differentiates the capital market from the money market?
Which statement best differentiates the capital market from the money market?
- The money market supports industrial development more than the capital market.
- The capital market does not involve any intermediaries.
- The capital market is less regulated than the money market.
- The capital market deals with long-term financial assets, while the money market involves short-term assets. (correct)
What factor significantly affects the development of a capital market in a country?
What factor significantly affects the development of a capital market in a country?
- The presence of stock exchanges only
- The entrepreneurial qualities of its people (correct)
- Government ownership of all industries
- Availability of international loans
Which of the following best describes the primary market?
Which of the following best describes the primary market?
What is a major disadvantage of the primary market?
What is a major disadvantage of the primary market?
Flashcards
Capital Market
Capital Market
A financial market where long-term funds are raised and invested. Think of it as a platform connecting those who need capital (like businesses) with those who have capital (like investors).
Primary Market
Primary Market
The part of the capital market where new securities are issued and sold for the first time. Imagine it as a fresh batch of stocks or bonds being offered to the public.
Functions of Primary Market
Functions of Primary Market
The crucial role of connecting businesses seeking long-term funding with investors who have surplus capital. Think of it as the bridge between companies and investors.
Primary Market Intermediaries
Primary Market Intermediaries
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Methods of Issue in Primary Market
Methods of Issue in Primary Market
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Study Notes
Capital Market (Primary Market)
- The capital market is a central coordinating and directing mechanism for the free and balanced flow of financial resources into the economy of a country
- It's essential for industrial and commercial development
- Short-term needs are met by the money market
- Long-term needs are met by the capital/security market
- The availability of savings, efficient organization of its constituents, and entrepreneurial qualities are important for a good functioning capital market
Learning Objectives
- Understand the meaning, characteristics, objectives, functions, and importance of the capital market
- Distinguish between money markets and capital markets
- Understand the evolution of the capital security market in India
- Understand the structure, constituents, and participants in the Indian capital market
- Study the components of the capital market
- Understand the meaning, features, and functions of the new issue or primary market
- Recognize the role, advantages, and disadvantages of the primary market
- Study primary market intermediaries
- Understand the types of issues
- Explore methods of issue and marketing of securities
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