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Capital Market - 2 Video Lecture | Crash course for UPSC (Hindi)

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FAQs on Capital Market - 2 Video Lecture - Crash course for UPSC (Hindi)

1. What is a capital market?
Ans. A capital market is a financial market where individuals and institutions buy and sell financial securities such as stocks, bonds, and derivatives. It provides a platform for companies to raise capital by selling their securities to investors.
2. How does the capital market work?
Ans. In a capital market, companies issue securities, such as stocks or bonds, to raise funds from investors. These securities are then bought and sold through various intermediaries, such as stock exchanges or investment banks. The price of these securities is determined by supply and demand, and investors can make profits by buying low and selling high.
3. What are the different types of securities traded in the capital market?
Ans. The capital market allows trading of various securities, including stocks, bonds, mutual funds, and derivatives. Stocks represent ownership in a company, while bonds are debt instruments. Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio. Derivatives, such as options and futures, derive their value from an underlying asset.
4. What is the role of regulators in the capital market?
Ans. Regulators play a crucial role in ensuring the fairness and transparency of the capital market. They set rules and regulations to safeguard investors' interests and maintain market integrity. Regulators monitor market activities, supervise participants, and enforce compliance with applicable laws. They also provide guidelines for disclosure requirements, investor protection, and market surveillance.
5. What are the risks associated with investing in the capital market?
Ans. Investing in the capital market involves certain risks. Market risk refers to the possibility of losing money due to fluctuations in the overall market. Specific risk relates to the performance of individual securities. Other risks include credit risk (default by issuers), liquidity risk (difficulty in buying or selling securities), and regulatory risk (changes in laws and regulations). It is important for investors to understand these risks and diversify their portfolios to mitigate them.
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