capital market instruments
TRANSCRIPT
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GROUP MEMBERS
Keyur Mota. 33
Ankita Nagap. 34
Manali Nare. 35
Subhakti Palekar. 36
Rupali Palve. 37
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CONTENTS
Introduction.
Types of capital market instrument
Equity share
Preference share
Debenture
Bonds
Difference between equity- debt securities
Conclusion
Reference
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INTRODUCTION
The capital market is the market for securities where companies and the government can rise long term fund.
It is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds and debentures.
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BASIC CAPITAL MARKET
INSTRUMENTS
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EQUITY SHARES
According to the Companies Act 1956, equity shares are that part of the share capital of the company, which are not preference shares.
They are called as ordinary shares or common stock or voting share.
These shareholder are the real owner of the company.
The return on equity shares depends on the performance profitability of the company.
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MERITS OF EQUITY SHARES
A permanent source of finance to the company
No fixed rate of dividend
Easy liquidity and marketability
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LIMITATIONS OF EQUITY
SHARES
No guarantee on returns to shareholders
Loss of managerial control
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PREFERENCE SHARES
Preference shares are known as preferred stock.
Preference share capital has two priorities i.e.,
in the repayment of capital and payment of dividend.
Preferred stocks usually carry no voting rigths.
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TYPES OF PREFERENCE SHARE
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MERITS OF PREFERENCE SHARE CAPITAL
From Company’s point of view
Hybrid security
Absence of voting rights
No dilution of control
Fixed return
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LIMITATIONS OF PREFERENCE SHARES
From Investor ’s point of view
Not secured
Not an attractive investment
No right to participate in the management
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When a corporation is in need of fund in addition to share capital it borrows money by issuing debentures.
The debenture holder gets interest which is fixed at the time of issue.
DEBENTURES
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Redeemable or
irredeemable
Convertible or non-
convertible
Secured or
unsecured
Bearer or
registered
TYPES OF DEBENTURES
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MERITS OF DEBENTURES
No loss of managerial control
A Flexible source of finance
Reduces burden of tax of the company
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LIMITATION OF DEBENTURES
Fixed rate on interest
Companies may have to mortgage their assets
Not an attractive investment from company’s point of view.
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BONDS
Bonds are issued by public authorities, credit institutions, companies and super national institutions in the primary market.
A bond is a negotiable certificate which entitles the holder of repayment of the principal sum plus interest.
The most common process of issuing bonds is through underwriting.
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TYPES OF BONDS
Bearer bonds
Registered bonds
Callable bonds
Convertible bonds
Zero coupon bonds
Fixed rate bonds
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DIFFERENCE BETWEEN
.
EQUITY SECURITY
Owner of the company. Creditor of the company.
Get Dividend only when company earns sufficient profits.
Provides steady in come to the investors.
Have voting rights. No voting rights.
Not secured. Secured in nature.
Share capital of the company. Borrowed capital of the company.
DEBT SECURITY
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CONCLUSION
Capital market plays an important role in ensuring the emergence of a vigorous and efficient economy.
It facilitates the internationalization of an economy by linking it with the rest of the world.
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REFERENCE
Financial Markets And Financial Services In India-Benson Kunjukuju
Equity Market-II-Anita Bobade.
www.inc.com/encyclopedia
www.martinfowler.com
BIBLIOGRAPHY WEBLIOGRAPHY
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