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MONEY MARKET
Money market is the institutional arrangements facilitating
borrowing and lending of short term funds i.e., less than one
year.
It is an arrangement that brings about a direct or indirect contact
between the lender and the borrower.
In the words of Geoffrey Crowther, “money market is a
collective name given to the various firms and institutions that
deal with the various grades of near money”.
RBI describes the money market as “the centre for dealings,
mainly of short term character, in monetary assets, it meets the
short term requirements of the borrowers and provides liquidity
or cash to the lender”.
The money market instruments are Commercial bills, treasury
bills, Call and short notice, Certificate of deposits, Commercial
paper, etc.
CAPITAL MARKET
It refers to the Institutional arrangement for facilitating the
borrowing and lending of long term funds.
It defined as “an organised mechanism for effective and
efficient transfer of money-capital or financial resources from
the investing parties i.e., individual or institutional savers to
the entrepreneurs (individual or institutions) engaged in
industry or commerce in the business either be in the private
or public sectors of an economy”.
It is an important component of financial system, market for
long term funds, helps in raising capital, meets demand and
supply of long term capital, involves intermediaries and deals
in marketable and non-marketable securities.
The capital market instruments are, equity shares, preference
shares, debentures and bonds.
Market for derivatives
Derivatives are one type of securities
whose value is derived from the
underlying assets, such as stocks, bond,
currencies and commodities.
A contract which derives its value from
the prices or index of prices of underlying
securities.
So marketing of derivatives mainly based
on the value of underlying assets.
Working of Stock Exchanges in India
•
• (The population of India is more than 125 crore but less than
2% of population actually invest in stock exchanges)
Stock exchanges also known as stock market or share market.
One of the main integral part of capital market in India.
It plays a vital role in growing industries and commerce of a country.
It is well organised market for purchase and sale of corporate and other securities
which facilitates companies to raise cpital by pooling funds from different investors as
well as act ass an investment intermediary for investors.
A stock exchanges in India organised in-voluntary, non profit making associations, e.g.,
Bombay, Ahamedabad & Indore, Public Limited Companies, e.g., Calcutta,
Delhi,Bangalore and Company Limited by Guarantee, e.g.,Hyderabad and Madras Stock
exchanges.
A stock exchange is a managed by a governing body-consist of President, Vice-Preident,
Executive Director, elected directors, public representatives and government nominees.
In India stock exchanges are under the control of SEBI (Securities Exchange Board of
India).
London Stock Exchange oldest in the world.
Bombay Stock Exchange (BSE)oldest in India.
In India there are 23 SEBI approved stock exchanges out of them BSE&NSE are the
main indices.
BSE=SENSEX, NSE=NIFTY.
Major stock exchanges in India
FUNCTIONS OF STOCK EXCHANGES
CLASSICAL
THEORY MODERN THEORY