Inflation Indexed Bonds
Chapter 1
Introduction to Capital Market
1. Capital Market
Capital markets are financial markets for the buying and selling of long-term debt- or equity-backed securities over one year is traded. Security includes- shares, debentures, bonds etc.
A key division within the capital markets is between the primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors, often via a mechanism known as underwriting. The main entities seeking to raise long-term funds on the primary capital markets are governments (which may be municipal, local or national) and business enterprises (companies). Governments tend to issue only bonds, whereas companies often issue either equity or bonds. The main entities purchasing the bonds or stock include pension funds, hedge funds, sovereign wealth funds, and less commonly wealthy individuals and investment banks trading on their own behalf. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere.
Capital market can be broadly divided into two parts
1. Debt Markets (where investors become creditors)
2. Stock Markets (for equity securities, also known as shares, where investors acquire ownership of companies)
1.2 Debt Market
It is a market meant for trading (i.e. buying or selling) fixed income instruments. Fixed income instruments could be securities issued by Central and State Governments, Municipal Corporations, Govt. Bodies or by private entities like financial institutions, banks, corporates, etc.
Debt instruments are contracts in which one party lends money to another on predetermined terms with regard to rate of interest to be paid by the borrower to the lender, periodicity of such interest payment, and the repayment of the principal amount borrowed (either in instalment or in bullet).
1.3 Current Scenario of Indian Debt Market
The
Introduction to Capital Market
1. Capital Market
Capital markets are financial markets for the buying and selling of long-term debt- or equity-backed securities over one year is traded. Security includes- shares, debentures, bonds etc.
A key division within the capital markets is between the primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors, often via a mechanism known as underwriting. The main entities seeking to raise long-term funds on the primary capital markets are governments (which may be municipal, local or national) and business enterprises (companies). Governments tend to issue only bonds, whereas companies often issue either equity or bonds. The main entities purchasing the bonds or stock include pension funds, hedge funds, sovereign wealth funds, and less commonly wealthy individuals and investment banks trading on their own behalf. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere.
Capital market can be broadly divided into two parts
1. Debt Markets (where investors become creditors)
2. Stock Markets (for equity securities, also known as shares, where investors acquire ownership of companies)
1.2 Debt Market
It is a market meant for trading (i.e. buying or selling) fixed income instruments. Fixed income instruments could be securities issued by Central and State Governments, Municipal Corporations, Govt. Bodies or by private entities like financial institutions, banks, corporates, etc.
Debt instruments are contracts in which one party lends money to another on predetermined terms with regard to rate of interest to be paid by the borrower to the lender, periodicity of such interest payment, and the repayment of the principal amount borrowed (either in instalment or in bullet).
1.3 Current Scenario of Indian Debt Market
The