the market where short-term debt securities are bought and sold

the market where long-term securities, such as stocks and bonds, are bought and sold; classified as primary or secondary

Federal agency that regulates the securities markets

the market in which new issues of securities are sold to investors.

the first public sale of a company's stock

the market in which securities are traded after they have been issued

Provides liquidity to security purchasers Provides continuous pricing mechanism

markets in which the buyers and sellers of listed securities come together to execute trades

involves trading in smaller, unlisted securities

The primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit.

Nature of capital market

It is that market in which shares, debentures and other securities are sold for the first time for collecting long-term capital. - This market is concerned with new issues. Therefore, it is also called NEW ISSUE MARKET.

market in which the buying and selling of the previously issued securities is done. - The transactions are generally done through the medium of stock exchange. - The chief purpose of this is to create liquidity in securities

is one of the important sources of medium and long-term financing where the owner of an asset gives another person, the right to use that asset against periodical payments

The periodical payment made by the lessee to the lessor is known as

According to him Lease is a contract, whereby the owner of an asset (lessor) grants to another party (lessee) the exclusive right to use the asset usually for an agreed period of time in return for payment of rent"

Once the lease agreement is signed, the lessor contacts the asset provider/manufacturer, (if he does not readily possess one). The lessor makes payment to the asset provider. He then delivers the asset to the lessee.

is a contract involving payment over a longer period. It is a long-termlease and the lessee will be paying much more than the cost of the property or equipment to the lessor in the form of lease charges. It is irrevocable. In this type of leasing the lessee has to bear all costs and the lessor does not render any service.

the lessee uses the asset for a specific period. The lessor bears the risk of obsolescence and incidental risks. There is an option to either party to terminate the lease after giving notice. In this type of leasing lessor bears all expenses. lessor will not be able to realize the full cost of the asset specialized services are provided by the lessor. This kind of lease is preferred where the equipment is likely to suffer obsolescence.

is also called capital lease. It is a long term lease. it is a legal commitment to pay the entire amount plus interest.

It is a rental agreement. It is for short term. The lessee is not committed for paying more than the original cost of the equipment during the contract The lessee can cancel the agreement prior to the expiration date.

What are the 8 motivations for Leasing

an economic device used to reducing risk by combining a sufficient number of exposure units to make their individual losses collectively predictable.

is the written instrument in which a contract of insurance is set forth. It contains the following:

The nature of the risk is described in the ____ which are usually found on the first page of an insurance policy.

that part of the policy which states what the insurer agrees to do and the major conditions under which it agrees. The insurer promises to compensate the insured if a loss under the insured peril occurs and if the insured meets the conditions of the contract. The insurer has no obligation to pay if the conditions are not met.

is a provision or part of the insurance contract limiting the scope of coverage. It comprise certain causes and conditions listed in the policy which are not covered. Death and disablement due to war and invasion, for example, are excluded in the risks covered by a personal accident policy.

are those relating, to the individual. The risk covered is the possibility that some peril may interrupt the income that is earned by an individual.

Examples of non life coverage

Examples of life coverage

is a kind of life insurance which is kept in force until death so long as premiums are paid, regardless of age and the time period. It is a permanent form of insurance and covers the insured for life

are those for which, in exchange for one premium, the insurer promises to pay the claim whenever death occurs.

are those for which the insured pays the same premium amount continuously as long as he is alive

belong to the type of insurance plan under which the premiums are paid for limited period of years, after which no further premium payments need to be made.

a contract between the insured and insurer whereby the insurer promises to pay the face amount of the policy to a third party (the beneficiary) if the insured dies within a specified time period.

which are written for a specific number of years and then automatically terminated.

written to terminate at some specified age of the insured, commonly 65.

which may be renewed by the insured before expiry date. without again proving insurability.

is the process of critically examining in detail accounting information given in the financial statements.

process of evaluating relationship between component parts of financial statements to obtain a better understanding of firm's position and performance.

is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the item of the balance. sheet and profit & loss account. It is also known as interpretation of financial statements or financial data to achieve the desired result.

It is the outcome of summarising process of accounting. Means of conveying to management, owners and to interested outsiders a concise picture of profitability and financial position of the business. Its purpose is to convey an understanding of aspects of business firm.

a method of using income statement and balance sheet data to detect trends and problems in the business It can be used to inventory and credit management problems, for pricing policies, in checking declining sales and improving profitability

Can the firm pay its long term debts as they come due? This is referred to as

• Current Assets/Current Liabilities Measures ability to meet short-term cash

• Current Assets-Inventory/Current Liabilities Measure ability to meet short-term cash needs more rigorously

Variability in possible outcomes of an event based on chance and refers to uncertainty associated with an exposure to loss

an agreement whereby one undertakes for a consideration, to indemnify another against loss, damage, or liability arising from an unknown or contingent event.

may be general or specific. The general usually cover the following: 1. Conditions or payment of premium; 2. Notices required; 3. Evidence of loss; 4. Cancellation; 5. Short-period rate scale;

This happens when the firm's revenues no longer cover cost.

This happens when the firm becomes insolvent or is unable to pay its debts

This term refers to a formal proceeding under the supervision of a court, including short-term liabilities, long-term debt and stockholders' equity, in order to correct gradually the firm's immediate inability to meet its current payments.

When creditor.and stockholders agree to give the firm a chance to get back on the right track under a mutually accepted plan, the action referred to is called

occurs when a firm dissolves and ceases to exist and its assets are solid.

is an out-of-court settlement where the creditors select a trustee to sell the assets and distribute the proceeds.

It is a legal process by which a person or business that is unable to meet financial obligations is relieved of those debts by the court. The court divides whatever is left of the assets of the person or firm among creditors, allowing creditors at least part of their money and freeing the debtor to begin anew.