THEME-02

Financial Market
THEME O2-PART 1 : MONEY MARKET
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THEME 02-PART 2 : CAPITAL MARKET
 EQUITY MARKET
Shares are the financial assets issued by the companies to raise capital from general public. When a
company offer shares, for sale, it’s just a portion of its ownership for cash. They are traded on the
stock exchange.

Basis for comparison Equity shares Preference shares

Meaning Ordinary shares of the company They carry preferential rights

representing the part ownership of
the shareholders in the company
Payment of dividend The dividend is paid after the
payment of all liabilities
on the matters of payment of
dividend and repayment of
capital
Priority in payment of dividend
over equity shareholders

Repayment of capital In the event of winding up of In the event of winding up of

company, equity shares are the company, preference
repaid at the end. shares are repayed before
equity shares

Voting rights Equity shares carry voting rights. Normally preference shares do
not carry voting rights. However
in the special circumstances
take get voting rights.

Convertibility Equity shares can never be Preference shares can be

converted. converted into equity shares.

New issues are made in the primary market while outstanding issues are traded (buy and sell) in the
secondary market.
When a company wishes to raise capital by issuing securities, it goes to primary market and raises long-term
funds by issuing financial securities. Primary market in a way facilitates formation of capital.

SEBI was established on 1988 and works as per SEBI act 1992 and has been empowered to oversee the
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functioning of the securities market and operation of intermediataries (brokers)

Bull and Bear: A bull is a stock market investor or speculator who buy shares in the stock market
with the intention that the price of the shares will rise in future and will make profit by selling
this at a higher price while BEAR is a stock market investor speculator whose sells share with the
intention that the price of share will fall in the future to avoid the losses.

Rolling settlement: it was first introduced on the basis of (T+5) but later on replaced by (T+2)
2022

basis (Now T+1) that is a share transaction must be completed when an account close by giving
the delivery of shares and taking money and vice-versa within transaction day And one working
day.