BASICS OF CAPITAL MARKET

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TO UNDERSTAND CAPITAL MARKET AT FIRST WE HAVE TO UNDERSTAND THE FINANCIAL MARKET OF WHICH THE CAPITAL MARKET IS A PART..


FINANCIAL MARKET :

  • FINANCIAL MARKET CAN BE DESCRIBED AS A PLATFORM THROUGH WHICH SAVINGS OF HOUSEHOLDS CAN BE CONVERTED INTO INVESTMENTS MADE BY PRODUCERS.

  • FINANCIAL MARKET IS A MARKET WHICH DEPLOYS (UTILIZE) EXCESS FUNDS LYING WITH THE HOUSEHOLDS TO BE CONVERTED INTO INVESTMENTS.

  • FINANCIAL MARKET IS A PHENOMENA TO CHANNELISE THE IDLE SAVINGS OF HOUSEHOLDS BY BRINGING SUCH SAVINGS INTO THE MAIN STREAM OF PRODUCTION.
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FINANCIAL MARKET IS FURTHER CATEGORIGED IN TWO TYPES


Image result for DIAGRAM OF CATEGORIZATION OF FINANCIAL MARKET IN CAPITAL AND MONEY MARKET


MONEY MARKET:

                                      REGULATED BY RBI AND MoF.
                                                           i.e
                                      RESERVE BANK OF INDIA AND MINISTRY OF FINANCE.

IT CAN ONLY PROVIDE SHORT TERM LOANS.
(MAX 1 YEAR i.e 365 DAYS)


CAPITAL MARKET :

                                     REGULATED BY SEBI AND MoF
                                                        i.e
                                      SECURITY EXCHANGE BOARD OF INDIA  AND MINISTRY OF FINANCE.



                                  CAPITAL MARKET


CAPITAL MARKET IS FURTHER CATEGORIZED IN TWO PARTS:

  1. SECURITIES MARKET
  2. COMMODITIES MARKET

 COMMODITIES MARKET  :

                                                          ALSO CALLED AS COMMODITY EXCHANGE.
                COMMODITIES- GOLD , SILVER, SPICES , AGRO PRODUCTS, PETROLEUM PRODUCTS. e.t.c.

NOTE: INDIA'S NO. 1 COMMODITY EXCHANGE IS MCX(MULTI COMMODITY                                                                                                                                            EXCHANGE)


SECURITIES MARKET : 

                                                   GENERALLY CALLED AS SHARE MARKET OR STOCK EXCHANGE.


                       SECURITIES: EQUITY SHARES , PREFERENCE SHARES, DEBENTURES , BONDS.



NOTE: BSE(BOMBAY STOCK EXCHANGE) AND NSE (NATIONAL STOCK EXCHANGE) ARE TWO MAIN STOCK EXCHANGES.








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