Name: Shilpi Lal
Roll No: 511138558
Question 1: Explain the securities market and discuss the methods of underwriting the securities?
Answer: An economic institute wherein the sale and purchase transactions of securities like equity shares, preference shares, debentures & bonds takes place between the subjects of the economy on the base of demand and supply is called as Securities Market. It is a place where the long term financial requirements of the Companies are met. The main functions of the Securities Market are as follows:
* It helps to attract new capital by means of issuance of new security (securitization of debt). * It helps to convert real asset into financial asset.
* It helps Companies or individuals to invest money for short or long term periods with the aim of deriving profit. * It also contributes into commercial function (to derive profit from operation on this market). * It also helps to bring price determination like demand and supply balancing, the continuous process of price movements and guarantees to state correct price for each security so the market corrects mispriced securities. * It gives information from the market about participants and traded instruments. * It acts as regulation function to create the rules of trade, contention regulation and priorities determination. The Securities Market consists of two components namely New Issues Market where companies issue securities directly to the public and the Stock Market where the existing securities are bought and sold. Methods of Underwriting the Securities: The different methods of Underwriting are as follows: a.) Standing Behind the Issue: In this method, the underwriter guarantees the sale of a specified number of shares within a specified number of shares within a specified period. The Underwriter has to promise to stand behind the issue and purchase the balance, in case the public does not take up the whole of specified amount of issue. b.) Outright Purchase: Here in this case the Underwriter purchase the issue outright and resell the securities to the investors. The issuers and the underwriters can negotiate the purchase price or the same can be determined by competitive bidding. c.) The Consortium Method: In this method the underwriting is done by group of underwriters who form a syndicate for the purpose. This method is adapted for large issues. No individual member has to bear the entire risk as this method helps to spread the risk among all the members of the consortium.
Question 2: List out the primary stock exchanges operating in India and the causes of price fluctuations of shares?
Answer: A stock exchange is a corporation or an organized market which provides a market place for the purchase and sales of securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. There are 23 stock exchanges in India. Among them two are national level stock exchanges namely Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE). The rest 21 are Regional Stock Exchanges (RSE).
The list of stock exchanges in India are as follows:
* Bombay Stock Exchange BSE (1875)
* National Stock Exchange (NSE) (1992)
* Over-the-Country Exchange of India (OTCEI)(1990)
* Ahmedabad Stock Exchange (ASE)
* Bangalore Stock Exchange Office (BgSE) (1963)
* Bhubaneshwar Stock Exchange (BhSE) (1989)
* Calcutta Stock Exchange (CSE) (1830)
* Cochin Stock Exchange (CSE) (1978)
* Coimbatore Stock Exchange (CSX) (1996)
* Delhi Stock Exchange (DSE) (1947)
* Guwahati Stock Exchange (DSE) (1983)
* Hyderabad Stock Exchange (HSEL) (1944)
* Jaipur Stock Exchange (1989)
* Ludhiana Stock Exchange (LSE) (1998)...