Aditya Khosla, the Managing Director of 'D.L.W. Ltd.' and Rajesh Puri, the
Finance Manager were discussing about the avenues of investing the idle
funds of the company. Aditya Khosla was of the opinion that money
should be invested in the capital market whereas Rajesh Puri, being
more conservative, feels that it would be better if the investment was
made in money market. Since the economy was oyant, the Managing
Director convinced Rajesh that they should take advantage of it and
invest in the capital market to get good returns. Ultimately it was
decided to invest the idle funds in the capital market. a kind of
instruments should the company buy? (b) Why is the capital market
expected to give a better return In a buoyant economy? State the
reasons. (c) Why and how safe are the securities in this market as
compared to money market?
Answers
Answer:
If a company returns the share transfer documents, to a buyer of its shares, without registration, for beingdefective, then such return is termed as(A) Defective Share(B) Dematerialize Share(C) Bad Delivery(D) All of the above
Answer: They should invest in 'capital market instruments.'
(ii) Capital market investments normally provide a larger return to investors than money market investments. Earnings possibilities
is greater if the securities are held for a longer period of time. First, there is the possibility of generating capital gains on equities investments. Second, a company's long-term success is shared by shareholders through large dividends and bonus offerings.
The capital market allocates the public's (investors') funds into the most profitable investment plan, resulting in economic growth and development.
(iii) Capital market instruments have greater risk in terms of both returns and principal repayments. Issuing corporations may fail to meet pre-projected performance levels, and promoters may deceive investors. However, the money market is often considerably safer, with a low danger of default. This is related to the shorter length of the investment as well as the financial stability of the company.
issuers, typically government banks and highly rated corporations
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