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ECONOMICS

INDEX

• Basics Of Economics
• Mathematics Behind Prices of
Commodities
• Stocks And Shares
• The Value of Money

Basics Of
Economics



What is economics?
Arthashasthra
Adam Smith
What do you mean by needs and
wants?
• Monopoly

Arthashastra
•Intricacies of nation
building
•Duties of Kings

The wealth of nations – Adam Smith .

Human Beings Want s Need s .

Supply Demand Price Concepts of economics .

Buyers – Look to buy at lowest price Equilibriu m of the market Sellers – Look to sell at highest price Competition between sellers .

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Mathematics Behind Economics • DEMAND CURVE .

• SUPPLY CURVE .

• EQUILIBRIUM .

Stocks and Shares • • • • • • • • What are stocks? Idea of share Types of shares Initial Public Offer Debentures Face value Preferential shares and equity shares Stock Market Index .

What are Stocks? .

Idea of shares • To procure the necessary capital .

.Why do companies issue stock? •To raise money •No need to make interest payments.

What does the shareholder get out of the deal? •Another source of income •Risk of Appreciation or Depreciation of shares .

Types of shares •Equity share •Preferential share .

.Equity Shares Carries voting rights. How are the dividends paid? Payment of dividend and repayment of capital.

Preferential Share •Do not enjoy any of the voting rights  . •How are dividends paid? • What happens if company goes bankrupt? .

• They do not create charge on the asset of the company. • A shareholder has the right to control. • A company only declares dividends when there are profits and rates vary year after year. • They create a charge on the asset of the company • A debenture has no right to control the company.Shares and debentures • The holders of shares may be described as part owner of the company. • The holder of debenture is the creditor of the company. • Return on a debenture is termed a interest and company has to pay it at a fixed rate whether there are profits or loss. .

with the other being dividend or interest income. Essentially. the capital that was invested in the security has increased in value. Capital appreciation is one of the two main sources of investment returns. .Capital Appreciation A rise in the value of an asset based on a rise in market price.

Main types of trading • Initial public offer-Primary market • Stock exchange-Secondary market .

Ipo •IPO stands for Initial Public Offering. •It’s the first time the stock is available to the public to purchase. .

STOCK EXCHANGES IN INDIA .

Face value and market value of share •Stock Exchange •Market Value •According to demand in the market. shares will be Par .

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THIS IS HOW THE TRADING SYSTEM LOOKS LIKE .

The Value of Money • • • • Quantity theory of money Fisher’s equation of exchange. . Inflation Foreign exchange.

.Quantity theories of money Print double the amount of money and the prices of everything will be double and the exchange value of the currency reduces.

Fisher’s equation of exchange PT=M V where. of transactions( includes goods and services) M= quantity of money V= velocity of circulation of money.on . T= No. P = the average price of each transaction.

Foreign Exchange • The price of anything (including money) is determined by the demand for it .

Factors that influence foreign exchange rate • • • • • • Inflation Interest rates Change in competitiveness Balance of payments Government debt Government intervention .

Inflation • What is inflation? • Along with fall in the value of purchasing money. .

Change in competitiveness' Increase in demands for produce of the country .

Balance of payments The country spends or imports more than it exports .

Government debt .

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Currency and inflation RUPE E FOREIG N GOODS & SERVIC ES .

THANK YOU .