Chapter – X

Capital Market
(4+ 4 = 8 Marks) 60-80 words

What is meant by capital market? Describe its nature. – 4 marks

• It is a market where all organizations, financial institutions and instruments provide long and medium term funds to the business sector.
• The two major components of capital market are
  • Primary (new issue market)
  • Secondary market (stock exchange).

The nature of capital market can be understood from the following points:

• It acts a link between savers and borrowers who need funds to invest profitably and efficiently.
• It helps firms to procure finances for long-term investments such as buying plant & machinery, building, etc.
• It obtains its funds through issue of various securities such as equity shares, bonds, debentures and innovative securities like zero interest bonds and deep discount bonds.
• It functions thru’ various intermediaries such as underwriters, bankers, stock brokers, etc.
• It includes both individual investors and institutional investors such as UTI, LIC, IDBI, etc

State any four PROTECTIVE functions of SEBI? (What is insider trading)?....................