Financial Markets Test - 30

The money market yield will be lower than the yield on stocks and bonds because of the low risk.

Commercial bills: A bills of exchange issued by a company (a trade bill) or accepted by a bank (a bank bill), as opposed to a Treasury bill, which is issued by the government.

There are various methods of floating new issues in the primary market:
(i) Offer Through Prospectus This involves inviting subscription from the public through issue of prospectus.
(ii) Offer for Sale Under this method securities are not issued directly to the public but offered for sale through intermediaries like issuing houses or stock brokers.
(iii) Private Placement Private placement is the allotment of securities by a company to institutional investors and some selected individuals.
(iv) Rights Issue This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.
(v) e-IPOs A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange.

Fiscal deficit in the budget means Revenue deficit plus the net borrowings of the Government.

Fiscal deficit happens due to events like a major rise in capital expenditure or deficit arising from revenue. It serves as an indicator of how well the government is managing its finances.

RBI: RBI is India's central bank and regulatory body under the jurisdiction of ministry of finance.

SEBI: SEBI was first established in 1988 as non-statutory body for regulating the securities market.

CCI: CCl is the sole quasi-judicial and regulatory body established under the competition Act, 2002.

Therefore RBI, CCI, SEBI are regulatory body but SIDBI is not a regulatory body.

A financial market helps to link the savers and the investors by mobilizing funds between them. In doing so it performs what is known as an allocative function. It allocates or directs funds available for investment into their most productive investment opportunity. The process by which allocation of funds is done is called financial intermediation.

The financial market is a platform where investors deal in financial instruments. Money market and capital market are part of the financial market. In the money market, extremely liquid financial instruments are traded, i.e. monetary instruments of short expiry are dealt with. On the the other hand, the capital market is for medium to long term finance.

NSE was incorporated in 1992. It was recognised as a stock exchange by SEBI in April 1993 and commenced operations in 1994 with the launch of the wholesale debt market, followed shortly after by the launch of the cash market segment.

The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year.

Beta: In finance, the beta is a measure of stock's volatility in relation to the overall market. i.e., Beta is a measure of how an individual asset moves when the overall stock market increases or decreases.