1. Capital Market

2. Capital Market
• Institutional arrangement for
borrowing of long term funds.
lending
and
• Consists of series of channels through which the
savings of the community are made available for
industrial and commercial enterprises and public
authorities.

3. Functions
• Mobilization of financial resources on a nation
wide scale.
• Leads to economic growth at a faster rate.
• Directs the flow of savings into most profitable
channels

4. Primary Market Or New Issue
Market
• Primary market is a market for raising long term
sources of finance.
• New securities that have never been previously
issued are offered.
• Both the new and existing companies can raise
capital from this market.
• Facilitate the transfer of funds from willing
investors to entrepreneurs setting up new
companies or going in for expansion, growth or
modernization.

5. Securities dealt in primary
market
Securities
Ownership
securities
Equity
Shares
Creditorship
securities
Preference
shares
No par
stock
Debentures

6. Ownership
securities

7. 1. Equity Shares
• Equity shareholders are the real owners of the
company.
• Have a control over the working of the company.
• Paid dividend after paying it to preference
shareholders.
• Rate of dividend depend upon the profits of the
company.
• No dividend in case of no profits.
• Cannot be redeemed during the lifetime of the
company.

8. Characteristics of equity shares
Maturity
Right to income
Claims on
assets
Voting rights
Pre-emptive right

9. 2. Preference Shares
• These shares have certain preferences as compared to
other types of shares.
• Fixed rate of dividend is paid on preference share capital.
2 Preferences
Preference for
payment of dividend
Repayment of capital

10. Features of preference shares
Maturity
Claims on
assets
Features
Control
Claims on
income

11. Types of preference shares
• Cumulative preference shares
• Non-cumulative preference shares
• Convertible preference shares
• Non-Convertible preference shares
• Redeemable preference shares
• Irredeemable preference shares
• Participating preference shares
• Non-Participating preference shares

12. 3. No Par Stock
• Shares having no face value
• Capital of the company issuing such shares is divided into
a number of specified shares without any specific
denomination
• Share certificate of the company states number of shares
held by the owner without mentioning any face value
• Value of such share determined by dividing the real net
worth of the company with the total number of shares of
the company
• Dividend is paid on per share

13. Creditorship
securities

14. Debentures or Bonds
• It is a document under the company’s seal which
provides for the payment of a principal sum and
interest thereon at regular intervals.
• Debenture holder is the creditor of the company.
• A fixed rate of dividend is paid on the
debentures.

15. Types of Debentures
Unsecured debentures
Secured debentures
Bearer debentures
Redeemable debentures
Convertible debentures
Irredeemable debentures

16. Features of Debentures
Maturity
Claims on
income
Claims on
assets
Control