Podcast
Questions and Answers
What is the main purpose of inter-bank participation certificates (IBPC)?
What is the main purpose of inter-bank participation certificates (IBPC)?
What is a bill of exchange?
What is a bill of exchange?
What is the primary market also known as?
What is the primary market also known as?
What type of instrument is a convertible debenture?
What type of instrument is a convertible debenture?
Signup and view all the answers
What is a private placement?
What is a private placement?
Signup and view all the answers
Where do investors buy and sell securities?
Where do investors buy and sell securities?
Signup and view all the answers
Study Notes
Money Market Instruments
- Inter-bank participation certificates (IBPCs) are short-term instruments used by banks to raise or deploy surplus funds.
- Bills of exchange are written orders binding one party to pay a fixed sum of money to another party on demand or at a future date.
Primary Market
- The primary market, also known as the new issue market, is where companies issue new securities to raise capital.
- Public issue is a type of primary market issuance where securities are offered to the general public.
- Rights issue is a primary market issuance where existing shareholders are offered additional securities.
- Private placement is a type of primary market issuance where securities are sold to pre-selected investors and institutions.
Secondary Market
- The secondary market is where investors buy and sell existing securities.
- Trades take place between investors and traders, rather than with the companies that issued the securities.
- National exchanges, such as the New York Stock Exchange (NYSE) and the NASDAQ, facilitate secondary market transactions.
Investment Instruments
Fixed-Income Instruments
- Fixed-income instruments guarantee regular, fixed income through investments.
- Examples of fixed-income instruments include debentures and bonds.
Variable Income Instruments
- Variable income instruments do not guarantee fixed income, and returns vary based on market fluctuations.
- Examples of variable income instruments include equity and derivatives.
- Investments in variable income instruments carry high risk, but also offer potential for high rewards.
Hybrid Instruments
- Some instruments, such as convertible debentures, offer both fixed and variable returns on investments.
- Convertible debentures can be converted into equity shares after a set period.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz covers various financial instruments, including inter-bank participation certificates, bills of exchange, and primary market securities. Learn about their features and uses.
