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    CONTENTS

    1. INVESTMENT BASICS 7

    What is Investment? 7

    Why should one invest? 7

    When to start Investing? 7

    What care should one take while investing? 8

    What is meant by Interest? 8

    What factors determine interest rates? 8

    What are various options available for investment? 9

    What are various Short-term financial options available for investment? 9

    What are various Long-term financial o ptions available for investment? 10

    What is meant by a Stock Exchange? 11

    What is an Equity/Share? 11

    What is a Debt Instrument? 12

    What is a Derivative? 12

    What is a Mutual Fund? 12

    What is an Index?13

    What is a Depository? 13

    What is Dematerialization? 13

    2. SECURITIES 14

    What is meant by Securities? 14

    What is the function of Securities Market? 14

    Which are the securities one can invest in? 14

    2.1 REGULATOR 15

    Why does Securities Market need Regulators? 15

    Who regulates the Securities Market? 15

    What is SEBI and what is its role? 15

    2.2 PARTICIPANTS 16

    Who are the participants in the Securities Market? 16

    Is it necessary to transact through an intermediary? 16

    What are the segments of Securities Market? 16

    3. PRIMARY MARKET 17

    What is the role of the Primary Market? 17

    What is meant by Face Value of a share/debenture? 17

    What do you mean by the term Premium and Discount in a Security Market?.17

    3.1 ISSUE OF SHARES 18

    Why do companies need to issue shares to the public? 18

    What are the different kinds of issues? 18

    What is meant by Issue price? 19

    What is meant by Market Capitalisation? 19

    What is the difference between public issue and private placement? 20

    What is an Initial Public Offer (IPO)? 20

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    1

    Who decides the price of an issue?..................................................................................... 20

    What does price discovery through Book Building Processmean?...................... 20What is the main difference between offer of shares through book buildingandoffer of shares through normal publicissue?.................................................................. 21What is Cut-OffPrice?............................................................................................................... 21What is the floor price in case of book building?........................................................... 21

    What is a Price Band in a book builtIPO?........................................................................ 21Who decides the PriceBand?................................................................................................. 22What is minimum number of days for which a bid should remain openduringbookbuilding?.............................................................................................................................. 22Can open outcry system be used for bookbuilding?................................................... 22

    Can the individual investor use the book building facility to make anapplication?................................................................................................................................... 22

    How does one know if shares are allotted in an IPO/offer for sale ? What isthetimeframe for getting refund if shares notallotted?.................................................... 22How long does it take to get the shares listed afterissue?....................................... 22What is the role of a Registrar to anissue?................................................................... 23Does NSE provide any facility forIPO?.............................................................................. 23What is aProspectus?............................................................................................................... 23What does Draft Offer documentmean?........................................................................ 24What is an AbridgedProspectus?....................................................................................... 24Who prepares the Prospectus/OfferDocuments?...................................................... 24What does one mean by Lock-in?...................................................................................... 24What is meant by Listing of Securities?.......................................................................... 25

    What is a ListingAgreement?.............................................................................................. 25What does Delisting of securities mean?........................................................................ 25

    What is SEBIs Role in anIssue?.......................................................................................... 25

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    Does it mean that SEBI recommends an issue?............................................................ 26

    Does SEBI tag make ones moneysafe?........................................................................... 26

    3.2

    FOREIGN CAPITAL

    ISSUANCE.................................................................................................. 26Can companies in India raise foreign currency

    resources?....................................... 26What is an American DepositoryReceipt?........................................................................ 26What is an ADS?......................................................................................................................... 27

    What is meant by Global DepositoryReceipts?.............................................................. 27

    4

    .

    SECONDARY

    MARKET..................................................................................................... 28

    4.1

    INTRODUCTION........................................................................................................................

    ... 28What is meant by Secondarymarket?............................................................................... 28What is the role of the SecondaryMarket?...................................................................... 28What is the difference between the Primary Market and the SecondaryMarket?

    ................... ..................... .................... ....................... ....................

    ................... ..................... ............

    28

    4.1.1Stock Exchange

    ......................................................................................................... 29

    What is the role of a Stock Exchange in buying and sellingshares?..................... 29What is Demutualisation of stockexchanges?................................................................ 29How is a demutualised exchange different from a mutualexchange?.................. 29Currently are there any demutualised stock exchanges inIndia?...................

    Err

    or!

    Bookmark not defined.

    4.1.2 Stock Trading.................................................................................................................. 30

    What is Screen BasedTrading?............................................................................................ 30What isNEAT?.............................................................................................................................. 30

    2How to place orders with the broker?

    ................................................................................

    30

    How does an investor get access to internet based tradingfacility?.....................

    30

    What is a ContractNote?.........................................................................................................

    31

    What details are required to be mentioned on the contract note issued bythe

    stock 3

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    broker?................................................................................................................................ 1What is the maximum brokerage that a broker can

    charge?...................................3

    1

    Why should one trade on a recognized stock exchange only forbuying/sellingshares?.......................................................................................................................................

    .....3

    2

    How to know if the broker or sub broker isregistered?..............................................

    32

    What precautions must one take before investing in the stockmarkets?...........

    32

    What Dos and Donts should an investor bear in mind when investing inthe

    stockmarkets?............................................................................................................................

    33

    4.2

    PRODUCTS IN THE S ECONDARY MARKETS

    ..........................................................................

    3

    5

    What are the products dealt in the SecondaryMarkets?............................................

    3

    5

    4.2.1

    Equity

    Investment....................................................................................................3

    7

    Why should one invest in equities inparticular?............................................................

    3

    7

    What has been the average return on Equities in India?...........................................

    3

    7

    Which are the factors that influence the price of astock?.........................................

    3

    8

    What is meant by the terms Growth Stock / Value Stock?......................