Ipo as an Investment Avenue

Chapter -1 INRODUCTION

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INTRODUCTION OF “THE IPO AS AN INVESTMENT AVENUE”:

1.1.1 CONSTITUENTS OF FINANCIAL SYSTEM:

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Financial Markets Financial markets could mean organizations that facilitate the trade in financial products. I.e. Stock exchanges facilitate the trade in stocks, bonds and warrants. The coming together of buyers and sellers to trade financial products. I.e. stocks and shares are traded between buyers and sellers in a number of ways including: the use of stock exchanges; directly between buyers and sellers etc. The financial markets are markets which facilitate the raising of funds or the investment of assets, depending on viewpoint. They also facilitate handling of various risks.

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Financial Instruments:

As savings are linked to investments by a variety of intermediaries & through a range of complex instruments. They are complex in terms of the features like maturity, return etc. For example –Treasury bills, Commercial bills, Cheques, Long dated securities, Shares, Bonds etc. An instrument having monetary value or recording a monetary transaction.

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Financial Institutions:

Financial intermediaries provide the link between the financial and the real sector financial intermediaries perform the roles of resource mobilization and allocation, risk diversification and liquidity management to foster development of the real sector. In a complete information deterministic world also, financial intermediaries can have the important role of a temporary resource provider when there is a time lag between the firms' factor payments and receipts from sale proceeds. This role assumes greater significance when the firms do not have enough internal resources to cover its factor

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payments and the financial intermediaries come in with working capital finance. These are also known as financial intermediaries because they bring savers & investors together & help in capital formation in the economy. For example: Banks, Mutual...