GROUP MEMBERS

Keyur Mota. 33

Ankita Nagap. 34

Manali Nare. 35

Subhakti Palekar. 36

Rupali Palve. 37

CONTENTS

Introduction.

Types of capital market instrument

Equity share

Preference share

Debenture

Bonds

Difference between equity- debt securities

Conclusion

Reference

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.

BASIC CAPITAL MARKET

INSTRUMENTS

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.

MERITS OF EQUITY SHARES

A permanent source of finance to the company

No fixed rate of dividend

Easy liquidity and marketability

LIMITATIONS OF EQUITY

SHARES

No guarantee on returns to shareholders

Loss of managerial control

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.

TYPES OF PREFERENCE SHARE

MERITS OF PREFERENCE SHARE CAPITAL

From Company’s point of view

Hybrid security

Absence of voting rights

No dilution of control

Fixed return

LIMITATIONS OF PREFERENCE SHARES

From Investor ’s point of view

Not secured

Not an attractive investment

No right to participate in the management

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

Redeemable or

irredeemable

Convertible or non-

convertible

Secured or

unsecured

Bearer or

registered

TYPES OF DEBENTURES

MERITS OF DEBENTURES

No loss of managerial control

A Flexible source of finance

Reduces burden of tax of the company

LIMITATION OF DEBENTURES

Fixed rate on interest

Companies may have to mortgage their assets

Not an attractive investment from company’s point of view.

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.

TYPES OF BONDS

Bearer bonds

Registered bonds

Callable bonds

Convertible bonds

Zero coupon bonds

Fixed rate bonds

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

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.

REFERENCE

Financial Markets And Financial Services In India-Benson Kunjukuju

Equity Market-II-Anita Bobade.

www.inc.com/encyclopedia

www.martinfowler.com

BIBLIOGRAPHY WEBLIOGRAPHY