Task-1

Good Investment Decision make investor earn more profits

explain.
Table of contents-

 Introduction
 Meaning & Definition of Investment
 Main Bodies of Good Investment Decision
 Diagram of Investment Decision
 Explanation of Points
 Conclusion
Introductions –
Investment is an economic activity in which every person is engaged in one form
or another. In present day the basic objective of the people is to making
investments and earns the good profits from it. Although all investments are risky
to some extent but they also provide the good returns on investment to the
investors.

Meaning of Investment –
Investment is the process of ‘Sacrificing something now for the prospects of
gaining something later’. This definition includes three dimensions which are in a
person’s mind when he is going to do any kind of investment and these
dimensions are as follows -

(i) Time
(ii) Today’s sacrifice
(iii) Prospective gain

Definitions of Investment –
 “Sacrifice of certain present value for some uncertain future value”
Sharpe/Alexander

“Purchase of a financial asset that produces a yield that is proportional

to the risk assumed over some future investment period”.
F. Amiling

Good Investment Decision –

Making investment decisions can be very challenging because of all the
things you have to consider. Here are things to help you make that
decision.
 Safety
Income Liquidity

Tangibility Regularity
& Stability
of Income
Good
Investment
Decision
Interest
Rates Stability of
Purchasing
Power

legality
Capital
Appriciation
Tax
Benefits

 Income - Income is also a factor in making a sound investment decision.

The general increase in employment opportunities which gave rise to
income level and avenues for investment, have lead to the ability and
willingness of working population to save and invest such savings.
 Safety – Every investor wants to the safety his of principal amount which
he is investing anywhere. Before choosing the type of investment the
investor should have to take the review of general economy and particular
industry trends. If an investor wants to minimize his risk and ensure the
safety of his principal amount then he has to be diversifying his investment.
Adequate diversification means diverse the investment into different ways.
 It may be geographical to avoid the damages due to natural calamities’.
Diversification can also be vertical and horizontal and can be according to
the bonds & shares etc.
 Short term or long term.- Generally, short term can be more risky than
long term. While the payoff is quicker on this type of investment, it is also
much more risky. The bigger investment may be the bigger risk and it may
be the bigger reward.
 Liquidity: - A liquidity investment is that investment which can be easily
converted into the cash at full market value. The investor generally prefers
securities which ensure liquidity and marketability. Every investor must
ensure a minimum liquidity in his investment to meet contingencies and
emergencies.
 Regularity & Stability of Income – Regularity of income at a stable and
consistent rate is essential in any investment programme. However the
stability of income is not consistent with the other investment principles.
 Stability of purchasing Power - The investor should have to balance
their investment programme to face any purchasing power instability. Any
intelligent investor knows that where money is losing its value by the by the
extent of the rise in prices.
 Capital Appreciation- The investment should provide for appreciation in
the capital invested over a period of time. The ideal growth stock is the
right industry bought at the right time. The investor should try to and
forecast which security will appreciate In future.
 Tax Benefits – The investor should be concerned about the returns on
the investments as well as the burden of taxes upon such returns. Real
returns are returns after taxes. The investor should plan their investments
in such a way that the tax liability is minimum.
 Legality - Legal aspect of investments must also be kept in mind. It legal
securities pose many problems for the investors. Investors should be aware
of the various legal provisions relating to the purchase of investment. These
securities are legal beyond doubt and help the investor in avoiding many
problems.
  Interest Rate - The investor should be seeing the level of interest rates
which is another good factor for a sound investment plan. Interest rates
may vary between one investments to other risky and non- risky
investments. They may also differ due to different benefit schemes offered
by the investments. These aspects must be considered before actually
allocating any amount. A high rate of interest may not be the only factor
favoring the outlet for investment. The investor has to include in his
portfolio several kinds on investments. Stability of interest is as important
as receiving a high rate of interest.

 Tangibility – The mostly investors prefer to keep a part of their money

invested in tangible securities like building, machinery, land etc. tangible
property does not yield an income. Tangible property gives only a pride of
possession.

Conclusion –
If the investor wants to make a good investment and earn high return on his
investment then he has to analyze the all above points. He has to invest his
money according to the performance of company. He has to need of good tax
planning and investing in tax savings schemes not only reduces the tax payable by
the investor but also helps him to save taxes on other incomes.
Task-2
Explain in detail the Complete Structure of Capital Market.
Table of contents-

 Introduction
 Meaning & Definition of Capital Market
 Main Bodies of Capital Market Structure
 Diagram of Capital Market
 Explanation of Capital market
 Conclusion

Introduction:-

The Indian Capital Market is one of the oldest capital markets in Asia
which evolved around 200 years ago. The Indian Financial System consists
of a variety of institutions, market and instruments. It provides the principle
means by which savings are transformed into investments. The rapid
economic growth and globalization of financial markets is perhaps one of
the most significant development at international level. The Indian financial
market plays an important role in economic development through the
saving investment process also known as capital formation. And Indian
financial market is divided into two parts – Money Market and Capital
Market.

Meaning of Capital market

Capital market is that market where we selling and borrowing long term securities
like share, bond , debenture etc. the maturity period of these securities is 10 to 15
years. Capital Market is controlled by the SEBI.

Capital market is like any other market, but differs in terms of the products traded
and their organization. Capital markets deal with the trading of securities. Capital
markets provide avenue where companies can raise funds to expand on their
businesses or establish new ones by issuing securities owned by the companies.
Like businesses in the private sector, Government issue its securities to raise
funds in capital markets to build electricity damn, construct new roads, bridges by
issues.

Definition of Capital Market

“Capital Market refers to all facilities and the institutional

arrangements for the borrowing and the loaning of the long-term
funds.”
. By L.N. Sinha

“Investment Market is a place at which savings are flowed.”

. By Bajor & Gruthman
 CAPITAL MARKET IN INDIA

On the basis of status On the Basis of Stages

Organized Unorganized

Primary Secondary

Central Commercial Financial

Bank Bank Institutions
. &stock market Shares Debenture Bond

Indigenous Money Chit Hire Investment

Banker Lenders Funds Purchase Companies

Shares Bond debenture

Equity Preference
. Share Share

Explanation of Capital market

The Capital Market can be classified broadly –

 On the basis of Status-

 Organized Capital Market- Capital market is that market which is regulated
and controlled by the rules and regulations of Central Govt.
1. Central Bank
2. Commercial Bank
3. Financial Institution

 Unorganized Capital Market –Unorganized capital market is that market

which is not regulated by the central Govt. It is regulated by the association
of person’s like- Sahukar, Seth etc.
1. Indigenous Banker
2. Money Lenders
3. Chit Funds
4. Hire Purchase
5. Investment Companies

 On the basis of Status –

 Primary Capital Market – The primary market is that market where we

selling and buying of securities at first time. The primary Capital Market is
also known as New Issue Market which is concerned with the issue of new
securities, i.e. shares or debenture or bonds to individual and institutions.
The public limited companies often raise their funds through the new issue
market for setting up or expanding their business. These are traded in Stock
Exchange.
The various methods through which capital can be raised are as given-
1. By Prospectus
2. By offer for sale
3. By private placing
4. By offering right issues
  Secondary Capital Maket – Secondary Market is also known as ‘Stock
Market’ it is that market where we selling and buying old securities. It is
related to the already existing securities. It provides the marketability to
the securities. It facilitates exchanges of securities and provides liquidity.

Conclusion-
The capital market consists of the Primary Market and Secondary Market. The
Capital is controlled and regulated by the SEBI. The Primary Market creates long
term instruments through which corporate entities borrow from the capital
market. But Secondary Market is the one which provide the liquidity and
marketability to these instruments these markets interact. The different types of
financial instruments that are traded in the capital markets are equity
instruments, credit market instruments, insurance instruments, foreign exchange
instruments, hybrid instruments and derivative instruments.

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Books:
Gupta, Shashi K: Security Analysis and Portfolio Management Investment
Management, Kalyani Publishers. Delhi

Bhole, M.K: Financial Markets and Institutions, Tata Mc Graw Hill. Delhi

Khan, M.Y: Indian Financial System, Tata Mc Graw Hill. Delhi

Gupta, O.P: Business Studies, S. Dinesh & Co. Delhi