All questions of Capital Market for B Com Exam

The primary function of the capital market is to facilitate the trading of existing securities.

- Facilitate trading of existing securities: The capital market provides a platform for buying and selling of stocks, bonds, and other financial instruments. Investors can trade these securities through stock exchanges or directly with other investors, allowing for liquidity and price discovery.
- Efficient allocation of capital: By providing a marketplace for securities, the capital market helps channel savings into productive investments. This efficient allocation of capital helps businesses raise funds for expansion and growth.
- Price determination: The capital market plays a crucial role in determining the prices of securities based on supply and demand dynamics. This price discovery mechanism ensures that securities are traded at fair market value.
- Risk diversification: Investors can diversify their portfolios by investing in a variety of securities available in the capital market. This helps spread risk and reduce the impact of market fluctuations on their overall investment.
- Capital formation: Companies can raise long-term capital by issuing securities in the capital market. This capital formation process enables businesses to finance projects, research, and development activities.
- Economic growth: The efficient functioning of the capital market is essential for economic growth as it provides the necessary funds for businesses to expand, innovate, and create employment opportunities.

In summary, the primary function of the capital market is to facilitate the trading of existing securities, promote capital formation, and contribute to the overall economic development.

The Role of SEBI in the Indian Capital Market

SEBI, which stands for the Securities and Exchange Board of India, is the regulatory body for the securities market in India. It plays a crucial role in ensuring the smooth functioning of the Indian capital market. SEBI's primary objective is to protect the interests of investors and promote the development and regulation of the securities market in India. Let us delve deeper into the role of SEBI in the Indian capital market.

Regulating Stock Exchanges
One of the key roles of SEBI is to regulate and oversee the functioning of the stock exchanges in India. It formulates rules and regulations for stock exchanges and ensures their compliance. SEBI promotes fair and transparent trading practices, monitors the activities of stock exchanges, and takes necessary actions to maintain their integrity and efficiency. It also regulates the listing and delisting of securities on stock exchanges.

Protecting Investor Interests
SEBI is responsible for safeguarding the interests of investors in the capital market. It ensures that investors are provided with accurate and adequate information to make informed investment decisions. SEBI regulates intermediaries such as brokers, sub-brokers, and merchant bankers to ensure that they adhere to the highest standards of professionalism and integrity. SEBI also investigates and takes action against any fraudulent or unfair trade practices that may harm investors.

Monitoring and Supervision
SEBI plays a crucial role in monitoring and supervising various entities in the Indian capital market. It keeps a close watch on listed companies, market intermediaries, and other participants to ensure compliance with regulations. SEBI conducts inspections, audits, and investigations to detect any violations and takes appropriate action against non-compliant entities.

Regulating Securities Issuance
SEBI regulates the issuance and trading of securities in the Indian capital market. It lays down guidelines and regulations for the issuance of new securities by companies. SEBI ensures that companies disclose all relevant information to investors and follow fair practices in their capital raising activities. It also regulates public offers, rights issues, and other forms of securities offerings to protect the interests of investors.

Promoting Market Development
SEBI plays an active role in developing and promoting the Indian capital market. It introduces new regulations and reforms to enhance market efficiency, transparency, and liquidity. SEBI encourages the adoption of best practices and international standards to make the Indian capital market globally competitive. It also promotes investor education and awareness to empower investors and create a conducive investment environment.

In conclusion, SEBI plays a vital role in regulating and developing the Indian capital market. By regulating stock exchanges, protecting investor interests, monitoring entities, regulating securities issuance, and promoting market development, SEBI ensures the smooth functioning and integrity of the securities market in India.

SEBI stands for Securities and Exchange Board of India, and its main functions in the Indian capital market include regulating the capital market, protecting the interests of investors, and promoting the development of the securities market.

The primary market is a market for issuing new securities to the public. It involves the initial sale of securities by companies and government entities to raise capital.

The main objective of the secondary market is to facilitate the trading of existing securities among investors. It provides a platform for the buying and selling of securities that have already been issued in the primary market.

The term "secondary market" in the context of the capital market refers to the trading of existing securities among investors. It involves the buying and selling of securities that have already been issued in the primary market.

One of the primary functions of the primary market is to issue new securities to raise capital for companies and government entities. This process involves offering shares, bonds, or other financial instruments to the public for the first time.

The primary market is primarily characterized by the issuance of new securities to the public by companies and government entities. It involves the initial sale of securities to investors, often through methods like Initial Public Offerings (IPOs) and bond offerings.

Stock exchanges play a crucial role in the capital market by facilitating the trading of existing securities. They provide a marketplace where investors can buy and sell stocks, bonds, and other financial instruments.

The primary market in India is primarily governed by the Companies Act, 1956. This legislation regulates various aspects of issuing, allotting, and transferring securities, as well as disclosures related to public issues.