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P2 Time Value of Money
P2 Time Value of Money
Ammar Hafeez
How do we obtain funds?
OR
Money Capital
markets markets
Primary
market
Secondary
market
Functions of financial markets
1. Price Determination
2. Funds Mobilization
3. Liquidity
4. Risk sharing
5. Easy Access
6. Capital Formation
Importance of Financial Markets
Financial markets provide a place where
participants like investors and debtors, regardless
of their size, will receive fair and proper
treatment.
They provide individuals, companies, and
government organizations with access to capital.
Money market
vs
Capital market
Primary market
vs
Secondary market
How do new securities get floated
for the first time?
1.Initial Public Offer (IPO)
• In this method, a firm issues a prospectus to the public,
inviting offers to subscribe for their securities.
• The investors who are interested, apply for the securities in
the requisite quantity.
• Usually, advertisements are issued in leading newspapers.
• Under the Companies Act 2013, it is obligatory for a public
limited company to issue a ‘prospectus’ or file ‘a statement
in lieu of prospectus’ with the Registrar of Companies.
The prospectus must be drafted and issued in accordance
with the provisions of the Companies Act and the
guidelines of SEBI.
• Once subscriptions are received, the firm allots
securities keeping in view the prescribed requirements.