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Commerce · Class 12 Commerce

Ch 5Capital Market — Class 12 Commerce, concept-first.

Every business, once it grows beyond its day-to-day cash needs, eventually needs long-term funds — money to buy land and buildings, install machinery, set up a new plant, or repay an earlier loan — funds that will stay locked into the business for years, not days.

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Key concepts

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Meaning and Features of the Capital Market

The capital market is the segment of the financial market dealing in medium- and long-term funds (generally over one year), bringing together long-term savers and users of capital through its two linked segments — the pr…

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Chapter contents

The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.

1

Meaning and Features of the Capital Market

Every business, once it grows beyond its day-to-day cash needs, eventually needs long-term funds — money to buy land and buildings, install machinery, set up a new plant, or repay an earlier loan — fu…

2

Functions and Importance of the Capital Market

A well-functioning capital market is not merely a place where shares change hands — it performs several functions that are central to a country's economic growth.

3

Primary Market (New Issue Market)

The primary market, also called the New Issue Market, is the segment of the capital market in which new securities are issued for the first time.

4

Secondary Market

The secondary market is the segment of the capital market in which already-issued securities — securities that have previously been allotted in the primary market — are bought and sold among investors…

5

Instruments of the Capital Market

Investors and issuers in the capital market deal in a range of long-term instruments, each with a different risk-return profile and a different legal relationship between the issuer and the investor.

6

Distinction Between Capital Market and Money Market

Both the capital market and the money market are segments of the wider financial market, and both perform the same broad function of channelling funds from those who have surplus money to those who ne…

Exercises

+Show 10 questions10 questions
  1. Q1What is the capital market? Explain its important features.Free
  2. Q2Explain the functions (importance) of the capital market.Free
  3. Q3What is the primary market? Explain any four methods of raising capital in the primary market.Free
  4. Q4Explain (a) e-IPO and (b) Preferential Allotment as methods of raising capital in the primary market.Preview
  5. Q5What is the secondary market? Explain its role in the capital market.Preview
  6. Q6Explain how the primary market and the secondary market are related to each other.Preview
  7. Q7Explain the instruments of the capital market.Preview
  8. Q8Distinguish between equity shares and preference shares.Preview
  9. Q9Distinguish between the capital market and the money market.Preview
  10. Q10Explain the role of the capital market in the economic development of a country.Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 18 questions18 questions
  1. Q1________ enables small investors to participate in the investment on share capital of large companies. (a) Fixed deposits (b) Mutual Funds (…Preview
  2. Q2Explain about Venture Fund institutions.Preview
  3. Q3(a) Discuss the characteristics of Capital Market. OR (b) What are the advantages of MBE?Preview
  4. Q4Government securities are issued by agencies such as ______. (a) State Governments (b) Semi-Government authorities (c) Central Government (d…Preview
  5. Q5Capital market is a market for : (a) Long-term finance (b) Short-term finance (c) Both short-term and medium term finance (d) Medium term fi…Preview
  6. Q6India Tech public company issued equity shares and preference shares. After some years the company went into liquidation. Which type of shar…Preview
  7. Q7Primary market is also called as: (a) New Issue Market (b) Capital Market (c) Indirect Market (d) Money MarketPreview
  8. Q8What is Capital Market?Preview
  9. Q9Write a note on Secondary Market.Preview
  10. Q10What do you understand by Issue of Securities at Premium?Preview
  11. Q11(a) Explain the functions of Capital Market. OR (b) Explain the challenges faced by Women Entrepreneurs.Preview
  12. Q12Capital market is a market for : (a) Long term finance (b) Short term finance (c) Both Short term and Medium term finance (d) Medium term fi…Preview
  13. Q13The shares which are offered to the existing shareholder at free of cost is known as ______. (a) Right Shares (b) Bonus Shares (c) Preferenc…Preview
  14. Q14Who are the participants in a Capital Market ?Preview
  15. Q15How many times a security can be sold in a Secondary Market? (a) Three times (b) Only one time (c) Multiple times (d) Two timesPreview
  16. Q16Participants in the capital market include : (a) Corporate (b) Financial Institutions (c) Individuals (d) All of the abovePreview
  17. Q17What is Government Securities Market?Preview
  18. Q18(a) What are the differences between Shares and Debentures? (any 5) OR (b) Explain the concept of Management. (any 5)Preview