Advertisements
Advertisements
Question
Answer each of these questions in about one hundred and fifty words:
Explain how capital markets are the most important source of raising finance for an entrepreneur.
Advertisements
Solution
Capital markets are the most important source of raising finance for the entrepreneurs. This market:
- Mobilises the financial resources on a nation-wide scale.
- Secures the much required foreign capital and know-how to promote economic growth at a faster rate.
- Ensures the most effective allocation of the mobilized financial resources by directing the same either to such projects which are capable of the highest yield or to the under developed priority areas where there is an urgent need to promote balanced and diversified industrialization. The needs of entrepreneurs who actually use the savings for productive purposes are varied. The capital market satisfies the tastes of savers and the needs of investors through its financial instruments and institutions.
APPEARS IN
RELATED QUESTIONS
Answer each of these questions in about fifteen words:
Name the two players in the capital market.
Answer each of these questions in about fifteen words:
What is a secondary market?
Answer each of these questions in about fifteen words:
What is the need of secondary market?
Answer each of these questions in about one hundred and fifty words:
State the nature of money market. Who are the major participants in the money market?
Answer each of these questions in about fifteen words:
What is a secondary capital market?
Differentiate between the money market and the capital market.
Policy that aims at managing the quantity of money in order to meet the requirements of different sectors of the economy and to increase the pace of economic growth –
Bank Rate means.
Capital market do not provide _________
What are the methods of floatation in Primary Market?
The most commonly used method for raising funds in primary market is ______.
Which market directly contributes to capital formation?
Read the following text and answer the following question on the basis of the same:
ISQM SOLAR Limited is searching for options to raise Rs. 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, DHAN LAXMI Pvr LTD. to suggest options for the same. DHAN LAXMI PVI LTD. suggested a list of options to the Board of Directors of the company. It was decided that for the immediate requirement of Rs. 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of Rs. 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise Rs. 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
"Rs. 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of inviting subscription from the public by making a direct appeal to investors to raise capital."
Identify the method of floatation of new issues in the primary market being discussed above, which the company has decided to use:
‘While there are benefits of going public as a source of finance for a company, it also means additional obligations'.
Analyse and justify the statement.
Identify and explain the following concept:
Raju’s father invests his money in a market for long term funds both equity and debt raised within and outside the country.
In its vital role as a financial intermediary, capital markets satisfies the tastes of the savers and the need of the investors. Evaluate the given statement.
Complete the correlation :
Money market: Short term funds:: ______ : Long term funds
Complete the correlation:
Money market : Short-term funds :: ______ : Long-term funds.
Complete the correlation:
Money market : Short term funds :: ______ : Long term funds
Complete the correlation:
Money market : Short term funds :: ______ : Long term funds
Which group supplies long‑term funds to the capital market?
What reaches the business sector and public through capital market channels?
Which pair is also included among capital market instruments?
