Q1. What is Capital Market? State its functions.
Ans:- A Capital market is a market for raising long-term funds. It consists of the primary (new issues) market and secondary market (stock exchange).
A capital market performs the following functions :
(i) It promotes thrift and savings in the society.
(ii) It provides an avenue for investment of household savings.
(iii) It gives liquidity to investment in securities.
(iv) It helps business raise capital.
(v) It provides a leading market for buying and selling securities.
(vi) It leads to capital formaton.
Q2. What is a Share?
Ans:- According to Justice Farewell, "A share is the interset of the shareholder in the company measured by a sum for money for the purpose of liability and of interset (dividend). It also consists of other rights given by the Articles of Association."
Q3. What is Equity Shares?
Ans :- Equity Shares are those shares which donot carry any special or preferential rights in the payment of annual dividend or repayment of capital. The rate of dividend on such shares is not fixed.
Q4. What is Preference Share?
Ans:- Preference shares are those shares which carry certain preferential or priority rights.
Q5. What is Debentures ?
Ans:- A debenture is a document or certificate issued by a company under its seal as an acknowledgement of its debt. It is also an undertaking to repay the specified sum with interest to its holder. Holders of debentures are called debentureholders.