CAPITAL MARKET

FINANCIAL MARKET y Market for creation and exchange of financial assets. . Financial markets also helps in price discovery and provides liquidity to financial assets. It helps in mobilization and channelizing the savings into most productive uses.

HOUSEHOLD SAVERS BANKS FINANCIAL MARKETS BUSINESS FIRMS INVESTORS .

CLASSIFICATION OF FINANCIAL MARKET .

.MONEY MARKET y The money market is a market for short term funds which deals in monetary assets whose period of maturity is up to one year. It is a market where low risk unsecured & short term debt instrument that are highly liquid are issued and actively traded everyday.

PARTICIPANT y Reserve Bank Of India y Commercial Banks y Non Banking Finance Companies y State Government y Large Corporate House y Mutual funds .

INSTRUMENTS y Treasury bill y Commercial Bill y Commercial paper y Certificate of deposit y Call money .

.CAPITAL MARKET y The term capital market refers to all facilities and institutional arrangement through which long term funds both debt and equity are raised and invested.

PARTICIPANT y Financial institutions y Banks y Corporate entities y Foreign investor y Ordinary retail investor .

. The essential function of primary market is to facilitate the transfer of investible funds from savers to entrepreneurs.PRIMARY MARKET y Primary market deals with new securities which were not previously tradable to the public.

It is a market for purchase and sale of existing securities.SECONDARY MARKET y This market is also known as stock market or stock exchange. It help existing investors to disinvest and fresh investors to enter the market .

A COMPARISON PRIMARY MARKET NEW ISSUE MARKET SECONDARY MARKET STOCK SXCHANGE Sale of securities by new companies  Ownership is exchanged between company & investor y Prices are determined by the management of the company  There is no fixed geographical location y y Trading of existing shares only y Exchange is in between investors y Prices are determined by the demand and supply for the securities y Located at specified places .PRIMARY & SECONDARY MARKETS.

The process of economic development is facilitated by well developed functioning capital market.CONCLUSION y An ideal capital market is one where finance is available at reasonable cost minimize transaction cost and capital most productively. .

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