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Questions and Answers
Which of the following are types of physical assets?
Which of the following are types of physical assets?
What is included in fixed returns?
What is included in fixed returns?
What are some examples of fluctuating returns?
What are some examples of fluctuating returns?
What is share market?
What is share market?
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An investor is always a person.
An investor is always a person.
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Which of the following are benefits of stock market investments?
Which of the following are benefits of stock market investments?
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What are the types of trading markets?
What are the types of trading markets?
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What is a characteristic of investors?
What is a characteristic of investors?
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Which of the following are money market instruments?
Which of the following are money market instruments?
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What is an initial public offer (IPO)?
What is an initial public offer (IPO)?
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What are the types of IPOs?
What are the types of IPOs?
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How is the pricing of an IPO determined?
How is the pricing of an IPO determined?
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Study Notes
Types of Investment Markets
- Physical Assets: Land, Building, Property, Gold, Business
- Fixed Returns: FD (Fixed Deposit), RD (Recurring Deposit), NSC (National Savings Certificate), PPF (Public Provident Fund), Government Securities, Government Bonds, Government Schemes, Non Convertible Debentures, Insurance
- Fluctuating Returns: Stocks (Shares), Derivatives, Mutual Funds, Investment Trusts, Crypto Currency
What is the Share Market?
- This section explains the concept of the share market, but doesn't offer a strict definition.
Who is an Investor?
- An investor is an individual or entity that commits capital expecting financial returns.
- Investors aim to grow their money or generate income during retirement.
Why Invest in the Stock Market?
- Liquidity: Shares are readily bought and sold.
- Flexibility of Amounts: You can invest what you can afford.
- Regulation: The stock market has safeguards for investors.
- Tech-Based: Investing is done digitally.
- High Return Potential: Potential for above-average returns.
- Capital Growth: Value of shares can increase over time.
- Dividends: Some companies distribute profits to shareholders.
Types of Trading Markets
- Capital Market: This section focuses on the capital market.
- Debt Market: The section touches on the debt market.
- Derivative Market: The section mentions the derivative market.
- Currency Market: The section mentions the currency market.
- Commodity Market: The section mentions the commodity market.
Investment vs. Trading
- Investors: Focus on long-term fundamentals, hold diversified portfolios, often use a "buy and hold" strategy.
- Traders: Focus on short-term technical analysis, hold smaller portfolios, often use a "buy and use stop-loss" approach.
Financial Markets
- Money Market: Short-term debt instruments
- Capital Market: Long-term debt and equity instruments
Money Market
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Money Market Instruments:
- Certificate of Deposit
- Repurchase Agreements
- Commercial Paper
- Eurodollar Deposit
- Federal Funds
- Municipal Notes
- Treasury Bills
- Money Funds
- Foreign Exchange Swaps
Capital Market
- Definition: A platform for buying and selling financial securities.
- Primary Market: Where companies raise capital by selling shares for the first time.
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Primary Market Products:
- IPO (Initial Public Offering)
- OFS (Offer for Sale)
- Right Issues
- IPP (Initial Private Placement)
- NCDs (Non-Convertible Debentures)
What is an IPO (Initial Public Offering)?
- An unlisted company's first sale of shares to the public.
- A way for companies to raise funds.
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Types of IPOs:
- Bulk IPO
- SME (Small and Medium Enterprise) IPO
Types of Investors in an IPO
- QIBs (Qualified Institutional Buyers)
- HNI (High Networth Individuals) or NII (Non-Institutional Investors)
- Retailers
How to Set IPO Pricing
- Fixed Price: Company and merchant banker determine the issue price.
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Book Building: Company and merchant banker set a price band, market determines the final price.
- Floor Price: The lowest price in the band.
- Cap Price: The highest price in the band.
- Cut-off Price: The final price determined through book building.
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Description
This quiz explores various types of investment markets including physical assets, fixed returns, and fluctuating returns like stocks. Learn about the share market, the role of investors, and the reasons to invest in stocks. Test your knowledge on essential investment concepts and terminology.
