These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this there is another market in which unsecured and short-term debt instruments are actively traded everyday. These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.

(a) Name the function being performed by the market in the above case.

(b) Also, explain briefly three other functions performed by this market.

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Solution

(a) Allocative function.

(b) Functions performed by financial markets.

(i) Establishes the price: It provides a platform for the interaction of the demand And the supply of funds, thereby helping in determining the price of the asset being traded.

(ii) Facilitates liquidity: It renders liquidity to the assets by trading (sale and purchase of assets) in the financial market, the assets can easily be converted into cash or cash equivalents.

(iii) Reduces the cost of transaction: It provides useful information about the various securities that are traded. In this way, it helps in reducing the cost of transaction in terms of time, effort and money for both the buyers and sellers.

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Q. These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed the most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this, there is another market in which unsecured and short-term debt instruments are actively traded everyday. These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.
(a) Name the function being performed by the market in the above case.
(b) Name the market segment other than the capital market segment in which unsecured and short-term debt instruments are traded. Also, give any three points of difference between the two.

Which among the following are roles played by the capital market in India’s Industrial growth?

Codes :

1 and 2 only
1, 2 and 4 only
1 and 3 only
All of these

R Ltd is a real estate company which was formed in 1950. In about 56 years of its existence, the company has managed to carve out a niche for itself in this sector. Lately, this sector is witnessing a boom due to the fact that the Indian economy is on the rise. The incomes of the middle class are rising. More people can afford to buy homes for themselves due to the easy availability of loans and accompanying tax concessions.

To expand its business in India and abroad, the company weighs various options to raise money through equity offerings in India. Whether to tap equity or debt market, whether to raise money from domestic market or international market or combination of both? When to raise the necessary finance from the money market or capital market? It is also planning to list itself in New York Stock Exchange to raise money through ADRs. To make its offerings attractive, it is planning to offer a host of financial plans and products to its stakeholders and investors and also expand its listing at NSE after complying with the regulations of SEBI.

What benefits will the company derive from listing at NSE?

R Ltd is a real estate company which was formed in 1950. In about 56 years of its existence, the company has managed to carve out a niche for itself in this sector. Lately, this sector is witnessing a boom due to the fact that the Indian economy is on the rise. The incomes of middle class are rising. More people can afford to buy homes for themselves due to easy availability of loans and accompanying tax concessions.

To expand its business in India and abroad, the company weighs various options to raise money through equity offerings in India. Whether to tap equity or debt market, whether to raise money from domestic market or international market or combination of both? When to raise the necessary finance from the money market or capital market? It is also planning to list itself in New York Stock Exchange to raise money through ADRs. To make its offerings attractive, it is planning to offer the host of financial plans and products to its stakeholders and investors and also expand its listing at NSE after complying with the regulations of SEBI.

How does the SEBI exercise control over 'R' Ltd in the interest of investors?

Q. This market transfers the money or capital from those who have surplus money to those who are in need of investment. Which of the following does it refer to?

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