study of capital markets

Understand how an initial public offering raises funds in the primary market by selling securities to the public, enabling a company to go public, fund growth, and repay debt.

Explore offer documents in capital markets, including prospectuses for public and rights issues, drafts, red herring prospectus, bridge prospectus, shelf prospectus, information memorandums, and placement documents.

Explore ipo pricing, including fixed price and book-building, the offer document with full disclosures including eps and return on net worth, and how investor demand shapes price within a range.

Learn how book building, as a price discovery method, governs IPO bid collection, cumulative demand, price ranges, cutoff price, and allotment decisions.

Explore book building in capital markets through a case study of bids, price range, cumulative demand, and cutoff price for allotment and refunds.

Explore the book building process in capital markets, including price discovery, price band, bidding, the book lead manager, and how the cutoff price sets the final issuance.

Explore a red herring prospectus for Ad Libs Entertainment Ltd, showing risk indicators, non-fixed issue price, and full disclosures from background to financial statements to protect investors.

Understand the three investor categories—retail investors, non-institutional investors, and qualified institutional buyers (QIBs)—with examples such as banks, mutual funds, FIIs, pension funds, and provident funds.

Identify the intermediaries in an issue: merchant bankers lead with due diligence and compliance; registrars finalize allotment and refunds; underwriters administer the issue and subscribe if demand falls short.

Explore the offer document’s components, including cover page details, risk factors, financial statements, legal disclosures, regulatory requirements, and offering information essential for investors.

Assign ipo grades on a five-point scale to assess fundamentals and aid investor comparison. Disclose and evaluate grades, considering competitive position, prospects, finances, governance, and risks.

Understand how capital forms a company’s initial investment, with shares representing ownership and debentures representing creditors; both are financial instruments to raise funds, shown as liabilities with face value.

Explore how shares signify ownership in a company, compare equity shares and preference shares, including voting rights, dividend priority, liquidation priority, and redeemable preference shares, and explain shareholder roles.

Equity shares of listed companies trade in the cash segment, offering dividends and capital appreciation, with high risk and no guarantee, with face value, market value, and liquidity differences.

Describe equity shares with differential voting rights, comparing plain vanilla shares with normal voting rights to restricted voting-rights stock, including minimum shares to vote and resulting illiquidity and lower valuation.

Examine how equity shares with differential rights (DVR) differ from ordinary shares using global examples like Volkswagen, Viacom, News Corp, and BMW, noting India’s predominance of ordinary voting rights.

Bonus shares are issued pro rata to existing shareholders, free of cost and fully paid, from accumulated reserves, and for example a 1:3 bonus increases share capital.

Explore practical stock market mechanics with a year-by-year example of Wipro shares, showing bonus issues and stock splits with ratios like 1:1 and 2:1, and their impact on holdings.

Examine how shares issued above face value create a security premium, why discounts are generally not allowed in India, and the limited exceptions for sweat equity and debt restructuring.

Understand how preference shares prioritize capital repayment and dividend payments, and explore cumulative, non-cumulative, participating, and non-participating types. Examine convertibility options and note that India restricts redeemable preference shares.

Explore preference shares in capital markets: fully paid up, non-convertible, cumulative, redeemable, nonparticipating with ₹1000 face value, 7.5% dividend, seven-year tenure, and unlisted status traded over the counter.

Describe equity capital as a permanent source of finance with owners and potential dividends, alongside preference share capital with fixed dividends, redemption, and leverage benefits.

Explore equity and preference capital as permanent finance, highlighting ownership, risk, dividend features, and the advantages and disadvantages of ordinary and preference shares.

Rights issues provide existing shareholders with a preemptive right to subscribe to additional shares at a price below market value, raising capital non-dilutively.

Sweat equity shares are issued by the company to its directors and permanent employees at a discount or for non-cash consideration such as services or intellectual property rights.

Explain employee stock options, giving directors, officers, and employees the right to buy company shares at a predetermined future price, and note startups use these options to attract top talent.

Define buyback as the reacquisition of a company's own securities, returning money to investors; globally, shares may be held as treasury stock or extinguished, with India following the extinguish approach.

Explore why companies use buybacks in the capital markets, including tax considerations, effects on outstanding shares and earnings per share, signaling undervaluation, and implications for shareholder returns and promoter control.

learn how buybacks occur from existing shareholders on a proportional basis, via a tender offer, or by buying from employees through ESOPs and sweat equity.

Infosys carried out a 2019 open-market buyback at Rs 800 per share, buying about 10.3 crore shares (14.5% of paid-up capital and free reserves) with face value Rs 5.

Explore debentures as debt instruments for creditors with annual interest, and classify them by security (secured or unsecured), convertibility (convertible, non-convertible, mandatory, optional, partial, full), and redeemability.

Explore non-convertible debentures, highlighting fixed maturity, higher interest, periodic payments, tax implications, and credit rating considerations.

Explore debentures as long-term debt instruments, including trustee, secured and unsecured forms, bearer and registered, redeemable or non-redeemable, with low cost of capital and tax-deductible interest, versus preference shares.

Discover how stock exchanges operate worldwide, from NYSE's floor-based auctions to NASDAQ's screen-based trading, and explore listing criteria, market services, and real-time price information.

The lecture describes the stock exchange as a liquid, continuous market for marketable securities, enabling liquidity, portfolio changes, and fair price determination through demand and supply.

Study how stock market indices track overall performance and signal future returns. See Dow Jones, FTSE, Sensex, and Nifty examples and note their sensitivity to company and country news.

Explore long-term capital markets and the key instruments used for capital formation, including bonds, stocks, debentures, depository receipts, and derivatives.

Explore how derivatives derive value from an underlying asset, such as equity, forex, or commodities, with futures, forwards, and options as the key types.

A forward contract is a private agreement to deliver a specified asset at a future price, with customizable quantity, quality, and delivery terms, enabling hedge against price risk.

Futures contracts are agreements between two parties to buy or sell an underlying instrument or commodity at a set price on a future date, with margin and marking to market.

Learn to compare forward and futures contracts, highlighting contract features, market use, and settlement differences in capital markets.

Examine cash versus derivative markets: cash trades tangible assets and single shares with upfront payment, while futures and options trade in lots with margin and linked underlying assets.

Explore stock futures mechanics, including initial margin, daily margin requirements, and marking to market, while comparing futures with forwards for hedging and speculation.

Identify the main types of future contracts, including currency futures, index futures, commodity futures, and interest rate futures.

Learn how spot price, forward and future prices relate via carrying costs and dividends, forming basis, contango or backwardation, and convergence of futures to cash.

Explore stock futures contracts, obligations of buyers and sellers, and cash settlement versus delivery; and examine index futures tied to major indices like Nifty and Dow Jones, settled in cash.

Explore the advantages of stock index futures over normal stock futures, including flexibility, leveraged gains with low margin, cost-efficient hedging, diversification across many securities, and cash settlement.

Learn about long position and short position in stock market, buying now to sell later when bullish, selling first to buy later when bearish, and the risks of short selling.

Explain how options give a buyer the right, not the obligation, to buy or sell underlying asset at a strike price before expiration, and cover call and put types.

Explore how a call option works, including strike price of 270, premium costs, and exercise versus lapse scenarios, illustrating profits when prices rise and losses limited to premium.

Explore call and put options with strike price and premium; buyers pay the premium, profit when market moves past the strike, while non-exercise caps loss.

Analyze the long call and its short call mirror image payoffs for a 40 strike with a 5 premium, showing loss limited to premium below 40 and breakeven at 45.

Shows the put option payoff with a 40 strike, 5 premium, breakeven at 35, and notes the mirror image of a long call.

Explore the key differences between options and futures: options give the buyer a right without obligation, while futures create an obligation and involve margin and mark-to-market.

Explore the landscape of capital markets, including equity and debt markets, money markets with primary and secondary segments, and the derivatives market with forwards, futures, and options.

Explore debt instruments like bonds and debentures, issued by governments or private entities, tradable in markets, where investors lend money for fixed or variable coupon payments, often tax-deductible.

Compare bonds with shares and deposits, highlighting higher interest and relative safety; explain coupon payments, maturity, redemption, and bondholders' priority over shareholders in liquidation.

Explore how debt instruments issue bonds in the primary market, trade in the secondary market, and cover liquidity, maturity (tenor), redemption, amortizing payments, and fixed or floating coupons.

Compare bearer and registered bonds, noting safety differences, then explain fixed and floating rate bonds and how market conditions guide hedging against interest rate volatility.

Learn how inflation bonds adjust coupon rates for inflation, and compare them with floating rate bonds, then explore municipality, term, and serial bonds.

Explore high yield bonds, or junk bonds, below investment grade with higher yields; learn how convertible bonds convert into issuer shares and how exchangeable bonds convert into other company shares.

Explore zero coupon bonds, which carry no coupon, may be issued at a discount or redeemed at par or premium. Recognize deep discount bonds as a zero coupon bond type.

Learn about callable bonds, where issuers can redeem before maturity, and puttable bonds, which let bondholders sell back to the issuer on a specified date.

Learn key bond terms such as face value (par), coupon rate and semiannual interest, issue price versus market price, and maturity and redemption value, including potential convertibility to shares.

Compare direct investing, where individuals pick stocks, with indirect investing through a fund manager who pools money into a mutual fund; returns go to unit holders as income and appreciation.

Explore mutual fund advantages: professional management with a research team, diversification, and convenient demat administration. Benefit from higher returns, low costs, liquidity, and regulated investor protection.

Explore the drawbacks of mutual funds, including no guaranteed returns, risk of underperforming benchmarks, and costs, while examining diversification limits, past-performance dependence, and tax and transfer implications.