Delhi College Of Arts and Commerce University of Delhi Subject- INVESTING IN ( E- Resources) Course- BCom (Prog) Sem IV-C DATE – 8th April 2020 Unit 1- Investing fundamentals Topic done already-  Meaning of investing  Nature of investing  Difference between Investment and  Process of investment  Risk and return in context of financial investment  Concept of risk return trade off in investment  Concepts of IPO and FPO and difference between them  Equity and bonds  Types of debentures (Part A and B)  Meaning, functions and Categories of  Segments of - and Secondary Market

 Topic to be done today-

 Segments of capital market- Primary Market and Secondary Market. Today we are going to discuss meaning of Secondary market or

 Secondary Market What is Secondary Market?

Also known as aftermarket, is the follow on of in the market. It is the place where , bonds, options and futures, issued previously, are bought and sold. Simply put, it is a marketplace where securities issued earlier, are sold and purchased. The secondary market facilitates the liquidity and marketability of securities. For management of company it serves as a monitoring and controlling channel by:  Facilitating value buildup control activities and,  Accumulates information with Secondary market provides real time valuation of securities on the basis of demand and supply. Secondary market definition itself states that it is second-hand market, when previously issued securities are bought and sold. . Market Participant in Secondary Market:

 Buyers  Sellers  Intermediaries

Products in Secondary market:

 Equity: Equity is the ownership in a company where all the have equal rights irrespective of the number of shares held by them. This includes: 1. Equity shares 2. Right issue or Right 3. Bonus shares

 Preference shares: Preferred shares also referred to as Preferred stocks. It is a form of stock which is a mix of features, not possessed by properties, it is generally considered as a Hybrid Instrument. Owners of these securities are entitled to a fixed to be paid regularly before any dividend can be paid on Equity shares. The preference shares are categorized into: 1. Cumulative preference shares 2. Participating preference shares

 Government Securities(G-sec): G-sec is a or debt obligation that is issued by Reserve of India on behalf of Government of India, in substitute of the central government’s market borrowing programme with a promise of repayment upon the maturity date. These are generally considered as low-risk investments because they are backed by the taxing power of a government. These securities have fixed coupon that is paid on specific dates on half-yearly basis.

 Debentures: Debentures are referred to as -term securities bearing a fixed rate of interest which are issued by a company and secured against the assets. These are usually payable half yearly on specific dates with principal amount repayable on maturity date. Debentures are divided into two categories: 1. Non-convertible debentures 2. Convertible debentures  Bonds: Bond is a negotiable instrument generally issued by a company, municipality or government agency which provides evidence of indebtedness. An in bond lends money to the and the issuer in exchange promises to repay the on a specified maturity date. The issuer pays interest periodically over the tenure of the loan. Its tenure can be upto 30 years. There are various types of bonds: 1. Zero Coupon Bonds 2. Convertible Bonds 3. Commercial paper 4. Treasury Bills

 How to Purchase Equity in Secondary Market?

 Open a Demat and trading account with the depository participant/broker  Link your bank account with Demat and Trading account  With help of broker and use of multiple trading platforms it is made easier to buy or sell shares  The broker buys or sells the shares by executing orders on the electronic terminal provided by the stock exchange  A contract note is issued by the broker detailing the value of shares purchased plus his brokerage cost  The broker collects shares via settlement process(T+1) and makes payment on behalf of the  Order gets executed on the final settlement date(T+2)  The shares get credited or debited in your demat account

NOTE: In case of difficulty in understanding of any topic, students can freely contact the undersigned. Subject taught by: Ms. Karishma Khurana (Assistant Professor, DCAC ) # 9711101731