Interview questions for capital market & NSE Essay

What is capital Market? Capital market is a market of securities. Where a company and government raise long term funds. it is a market where money invested more them one year. In this we include the stock market and bond market Definition of ‘Debt’ An amount of money borrowed by one party from another. Many corporations/individuals use debt as a method for making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest. Definition of ‘Primary Market’ A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors Definition of ‘Secondary Market’ A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges – such as the New York Stock Exchange and the NASDAQ are secondary markets. Secondary markets exist for other securities as well, such as when funds, investment banks, or entities such as Fannie Mae purchase mortgages from issuing lenders. In any secondary market trade, the cash proceeds go to an investor rather than to the underlying company/entity directly. What do you mean by Equity investment? Answer: An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains, as the value of the stock rises. It may also refer to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup company What do you mean by stock market or equity market? Answer: A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. What do you mean by money market? Answer: The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. What do you mean by stock exchange? Answer: A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. What do you mean by Financial regulation? Answer: Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system. This may be handled by either a government or non-government organization What are the Aims of financial regulation? Answer: Aims of regulation The aims of financial regulators are usually: * To enforce applicable laws * To prevent cases of market manipulation, such as insider trading * To ensure competence of providers of financial services * To protect clients, and investigate complaints * To maintain confidence in the financial system * To reduce violations under laws List some financial regulatory authorities * Commodity Futures Trading Commission (CFTC) * National Credit Union Administration (NCUA) * Financial Services Authority (FSA), United Kingdom What do you mean by NSE? Answer: The National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. Trading at NSE can be classified under two broad categories: (a) Wholesale debt market and (b) Capital market. What are the advantages of NSE? (National Stock Exchange) NSE has several advantages over the traditional trading exchanges. They are as follows: * NSE brings an integrated stock market trading network across the nation. * Investors can trade at the same price from anywhere in the country since inter-market operations are streamlined coupled with the countrywide access to the securities. * Delays in communication, late payments and the malpractice’s prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations, with the support of total computerized network. Why India needs economic planning? One of the major objective of planning in India is to increase the rate of economic development, implying that increasing the rate of capital formation by raising the levels of income, saving and investment. However, increasing the rate of capital formation in India is beset with a number of difficulties. People are poverty ridden. Their capacity to save is extremely low due to low levels of income and high propensity to consume. Therefor, the rate of investment is low which leads to capital deficiency and low productivity. Low productivity means low income and the vicious circle continues. Thus, to break this vicious economic circle, planning is inevitable for India. What are general objectives of Indian Planning? The long-term general objectives of Indian Planning are as follows : * Increasing National Income * Reducing inequalities in the distribution of income and wealth * Elimination of poverty * Providing additional employment; and * Alleviating bottlenecks in the areas of : agricultural production, manufacturing capacity for producer’s goods and balance of payments. *