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Financial Market Operations: Inancial Arket Perations
Financial Market Operations: Inancial Arket Perations
Market
Operations
Presented by:
ROLL
NAME TOPIC
NO.
Primary
market
Capital
market
Secondary
market
Primary
market
• Market wherein
E.g. IPO
Features of Primary market
New issues
No particular place
Various methods of
floating capital
Before Secondary
market
Advantages Of
Primary Market
•• The
The primary
primary market
market acts
acts as
as aa potential
potential avenue
avenue for
for
1.Avenue For diversification
diversification to
to cut
cut down
down onon risk.
risk.
Investment •• It
It enables
enables an
an investor
investor to
to allocate
allocate his/her
his/her investment
investment
across
across different
different categories.
categories.
•• Funds
Funds are
are mobilised
mobilised from
from commoners
commoners for
for investing
investing in
in
2.Mobilisation other
other channels.
channels.
of Saving •• Investor
Investor can
can gain
gain good
good returns
returns with
with the
the money
money invested
invested
3.Channelising •• As
As it
it helps
helps to
to mobilize
mobilize the
the small
small and
and scattered
scattered savings
savings of
of
an
an investor.
investor.
Savings for •• The
The funds
funds are
are utilized
utilized for
for productive
productive purposes
purposes and
and thus,
thus,
productive use the
the wastage
wastage inin unproductive
unproductive uses
uses is
is avoided
avoided
4.Source • For rapid
rapid development of
growth
growth of
of a country
country requires the
of large scale industries
industries which need huge
of large capital.
capital.
supplier • Therefore, huge
huge money
money can be raised in a primary
fund market by
by floating
floating new shares in
in the market
market
•• The
The primary market
market facilitates
facilitates increase
increase in
in
5.Rapid production
production and
and productivity
productivity in
in the
the economy.
economy.
industrial •• And
And with
with new
new companies
companies established
established they
they
Growth promote
promote rapid
rapid industrial
industrial growth
growth in
in the
the country.
country.
Disadvantages Of
Primary Market
1.Possibilty For • There is ample scope of attracting investors by giving
deceiving misleading information.
• This affects the money of the innocent investor.
investors
also known as
STOCK EXCHANGE
PURPOSE –
to create liquidity
Sell securities for cash
1. Spot Market
traded for immediate delivery & payment
2. future market
traded for future delivery & payment
Features of secondary market
Creates liquidity
Particular place
Encourages new
instrument
Services of stock exchange
Liquidity and marketability
Stock of funds
Promotion of investment
Brokerages
• Investors profits may suffer a dent due
to commissions on each transactions.
Risk factor
• They are subject to high risk due to
external factors.
Government • Some policies can act as a
policies hindrance in this market.