Capital Market Financing (Essay Sample)

Assignment on “Capital Market Financing”
Executive summary
Investing in long-term debt is the primary function of the capital markets. A capital market is a place where buyers and sellers trade financial instruments such as bonds and other such instruments. People and businesses trade financial securities in this market. Public and private sector organizations/institutions also frequently sell securities on the capital markets to raise money. There are primary and secondary marketplaces in this type of market. In the capital market, corporations and the government can raise long-term funds through the sale of securities. It's a market where people can borrow money for longer periods of time than a year. The stock and bond markets are part of the capital market. The word "capital market" refers to a network of interconnected marketplaces in which capital in financial form is lent or borrowed for short, medium, and long-term periods, as well as for undetermined periods in the case of equity.
Table of Contents TOC \o "1-3" \h \z \u Executive summary PAGEREF _Toc98861970 \h 1Introduction PAGEREF _Toc98861971 \h 3Capital market of Bangladesh: PAGEREF _Toc98861972 \h 3Types of Capital Market: PAGEREF _Toc98861973 \h 4Operation of Primary & Secondary Market: PAGEREF _Toc98861974 \h 4IPO PAGEREF _Toc98861975 \h 6Preparing an IPO PAGEREF _Toc98861976 \h 6ROLE OF CAPITAL MARKET PAGEREF _Toc98861977 \h 8Market System PAGEREF _Toc98861978 \h 8The Instruments of Capital Market PAGEREF _Toc98861979 \h 101. Share PAGEREF _Toc98861980 \h 112. Debenture PAGEREF _Toc98861981 \h 113. Bond PAGEREF _Toc98861982 \h 11Stock Market in Bangladesh PAGEREF _Toc98861983 \h 14Dhaka Stock Exchange (DSE) PAGEREF _Toc98861984 \h 14Nature of Dhaka Stock Exchange PAGEREF _Toc98861985 \h 14Chittagong Stock Exchange (CSE) PAGEREF _Toc98861986 \h 15SWOT Analysis of Stock Market PAGEREF _Toc98861987 \h 17Circuit Breaker PAGEREF _Toc98861988 \h 18Category of the companies PAGEREF _Toc98861989 \h 19Settlement cycle PAGEREF _Toc98861990 \h 19T+2 settlements cycle PAGEREF _Toc98861991 \h 20T+3 settlements cycle PAGEREF _Toc98861992 \h 20Margin Loan PAGEREF _Toc98861993 \h 20Problems of Structure of Capital Market in Bangladesh PAGEREF _Toc98861994 \h 20Math Portion PAGEREF _Toc98861995 \h 21Conclusion: PAGEREF _Toc98861996 \h 24References: PAGEREF _Toc98861997 \h 25
Introduction
It is possible to describe the capital market as the engine that drives capital raising and, in turn, the speed of industrialization and privatization. To put it another way, the capital market refers to the country's stock exchanges. A market for long-term investment funds exists here. Bangladesh's capital market is the third-largest in South Asia, while being one of the continents smallest. In addition to the Dhaka Stock Market (DSE) and Chittagong Stock Exchange (CSE), which both operate fully computerized stock exchanges, the country also has an over-the-counter exchange run by CSE. The Securities and Exchange Commission (SEC) is also a part of the regulatory structure because it implements and oversees rules and regulations to operate and develop the capital market. For the settlement of CSE and DSE transactions in dematerialized securities, Bangladesh's Central Depository Bangladesh Limited (CDBL) serves as Bangladesh's only Central Depository. Many people are involved in the financial markets. All the major financial institutions, including commercial banks, savings and loan associations, credit unions and mutual savings banks as well as merchant bankers, discount houses and venture capital companies, are included in this group. They also include investment clubs, pension funds and stock exchanges, as well as underwriters, portfolio-managers and insurance companies.
Capital market of Bangladesh:
As part of the global financial system, Bangladesh's capital market is considered a "emerging" market. Objectives: To create in Bangladesh a capital that is well-balanced, secure, and resilient As the third biggest in South Asia, Bangladesh has a relatively tiny capital market. Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange are the two fully automated stock exchanges in Bangladesh (CSE). BSEC was founded in 1993 to supervise the activity of the exchanges, ensure proper issuance of securities and compliance with regulations, and protect the interests of securities investors after many years of operations.
Types of Capital Market:
* The Primary Market
The primary market deals with newly issued securities and is responsible for generating new long-term capital.
* The secondary market
The secondary market handles the trading of previously-issued securities and must remain highly liquid in nature because most of the securities are sold by investors.
Operation of Primary & Secondary Market:
Investors Share purchase:
Investor shares: Mutual fund shares purchased by individual investors as opposed to institutional shareholders.
Stock Market: Participants in the stock market range from small individual stock investors to large hedge. Provide a bid and ask price at which they will always purchase or sell their stock.
A share of stock is the smallest unit of ownership in a company. Investors buy preferred stock for its current income from dividends, so look for companies that make big profits to use.
Investment Bangladesh stock market (CSE and DSE): Investment in primary and secondary market share is eligible for investment allowance. The steps necessary in order to buy/sell share in Bangladesh stock.
Primary Market: Underwriting groups are responsible for facilitating primary markets, which are essentially two separate markets inside the stock market.
What you learn about primary and secondary markets will help you better grasp how equities move.. There would be a lot more difficulty in capitalizing on the stock market without them. Companies, governments, and other public sector organizations can raise money by selling new stock or bonds on the primary market..
Markets for primary and second-hand securities exist. Securities such as stocks and bonds are first placed with investors directly.
When shares are generated and sold by the issuing company in order to benefit financially by raising capital, this is referred to as the "primary market."
The primary market is the section of the capital markets that deals with the selling of a new stock issue, which is known as an IPO in the industry.
Government and public sector organizations can raise money by issuing new instruments, such as stocks or bonds. In most cases, a group of stockbrokers will take care of this for you.
Features of Primary Markets: New long-term equity capital can be found here. The initial sale of securities occurs on the primary market. In this way, the fresh issue market is also referred to as (NIM). When the corporation issues the securities directly to investors, it is known as a primary issue. After receiving the funds, the corporation will issue the investors with fresh certificates of ownership. Companies use primary concerns to start new businesses or to modernize their present businesses.
The primary market is essential to the economy's ability