Primary Markets
Free Pricing Regime * Before 1992, Regulator of new issues was CCI (Controller of Capital Issues) * Approval from CCI for raising funds in Primary markets was essential. * Timing, Quantum and Pricing of the issue was decided by the controller. * New Companies could issue shares only at par and the existing companies with substantial reserves could issue shares at premium. * Fixed Price mechanism results in under pricing of many issues.
Thus after 1992, promoter and the merchant banker together decide the price of the issue.
Mutual Funds
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.
It is a diversified portfolio of financial instruments like equities, debentures / bonds or other instruments in which the funds can be deployed.
Unit holders in proportion to their investment share income.
How Mutual Funds Work? * A large number of people with money to invest buy shares in a mutual fund. * They pool their money for buying power. * The fund manager invests the money in a collection of stocks, bonds or other securities. * If the manager is successful in selecting good companies that grow, the fund will increase in value. * Investors receive periodic distributions
Advantages of Mutual Funds. * Diversification: The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value. * Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decide what
Thus after 1992, promoter and the merchant banker together decide the price of the issue.
Mutual Funds
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.
It is a diversified portfolio of financial instruments like equities, debentures / bonds or other instruments in which the funds can be deployed.
Unit holders in proportion to their investment share income.
How Mutual Funds Work? * A large number of people with money to invest buy shares in a mutual fund. * They pool their money for buying power. * The fund manager invests the money in a collection of stocks, bonds or other securities. * If the manager is successful in selecting good companies that grow, the fund will increase in value. * Investors receive periodic distributions
Advantages of Mutual Funds. * Diversification: The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value. * Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decide what