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Instruments of Capital market, Indian Financial system Video Lecture | Indian Financial System - B Com

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FAQs on Instruments of Capital market, Indian Financial system Video Lecture - Indian Financial System - B Com

1. What are the instruments of the capital market in the Indian financial system?
Ans. The instruments of the capital market in the Indian financial system include stocks, bonds, derivatives, mutual funds, and government securities. These instruments are traded in the capital market to raise funds for companies and the government.
2. What is the role of stocks in the Indian capital market?
Ans. Stocks, also known as shares or equities, represent ownership in a company. In the Indian capital market, stocks are traded on stock exchanges, and investors buy and sell them to earn returns. Companies raise capital by issuing stocks, and investors can benefit from capital appreciation and dividend income.
3. How do bonds function in the Indian financial system's capital market?
Ans. Bonds are debt instruments issued by companies and the government to raise funds. In the Indian capital market, investors can buy and sell bonds. Bondholders receive periodic interest payments and the principal amount upon maturity. Bonds are considered less risky than stocks and provide fixed income to investors.
4. What are derivatives in the Indian financial system's capital market?
Ans. Derivatives are financial contracts whose value is derived from an underlying asset. In the Indian capital market, derivatives include futures, options, and swaps. These instruments are used for hedging, speculation, and arbitrage. Derivatives enable investors to manage risk and make profits based on price movements of the underlying asset.
5. How do mutual funds operate in the Indian capital market?
Ans. Mutual funds pool money from multiple investors to invest in a diversified portfolio of securities such as stocks, bonds, and money market instruments. In the Indian capital market, mutual funds are managed by asset management companies (AMCs). Investors can buy and sell units of mutual funds, and the returns are based on the performance of the underlying securities. Mutual funds provide small investors with access to professionally managed portfolios and diversification.
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