CU -BBA Sem VI- investment management

5. Which of the following is NOT a capital receipt? a. Recovery loan b. Disinvestment c. Borrowing d. Tax Answers 1-a, 2-d, 3-a. 4-b, 5-d 3.8 REFERENCES References books  Christopher Infante, \"LevelX Pre IPO,\" LevelX, LevelX, accessed December 24, 2020.  Jess Lederman's 1990 book, \"The Handbook of Asset-Backed Securities,\"  Calvin Reis-Roy (2003). An examination of securitization law and practise.  Janet Tavakoli (September–October 2005). Caveat Emptor for CDOs GARP Risk Analysis. International Society of Risk Professionals (26). Textbooks  Hypertextual Financial Glossary, \"Wholesaler\" (Campbell Harvey)  icma-group.org\" is the website address. found 2012-05-18.  sifma.org\". SIFMA, 2012, 10 May. found 2012-05-18. Website  https://en.wikipedia.org/wiki/Security (finance)  https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/quality- of-security 51 CU IDOL SELF LEARNING MATERIAL (SLM)

52 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 4 LEGAL FRAME WORK OF SECURITY MARKETS STRUCTURE 4.1 Learning Objectives 4.2 Introduction 4.3 Frame work 4.4 Laws that protect collection and storage 4.4.1 GDPR 4.5 Summary 4.6 Keywords 4.7 Learning Activity 4.8 Unit End Questions 4.9 References 4.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  The securities contract  Laws that protect collection and storage  Stock exchange  Economic Growth  GDPR 4.1 INTRODUCTION This course examines the placement of the security function within the organisational structure as well as the function of the information security officer in the creation of information security standards, guidelines, and practises. After that, it explains how to conduct a security audit, the fundamentals of information security governance, and the significance of stakeholder involvement in the execution of the organization's information assurance programme. After 53 CU IDOL SELF LEARNING MATERIAL (SLM)

investigating the function digital forensics play in the incident management process, it then examines the legal framework under which information security operates. 4.2 LEGAL FRAMEWORK IN SECURITY MARKETS Information security management is impacted by numerous broad legal rules, laws, and regulations. These issues span a wide range, from the security ramifications of managing personal data to computer abuse and the management of intellectual property belonging to a company. Understanding who has legal control over the organisation and which laws the company must abide by is important for the information security manager. Directives must be implemented by member state law in the European Union, albeit how they are applied may differ between members. While there is little room for deviation, regulations must be implemented directly into member state law. This offers a more uniform application among member states. Federal laws in the US are applicable everywhere, however state laws can vary. This raises the level of complexity for businesses operating in the US. Before conducting business in a foreign country, it is wise to acquire legal counsel due to the variations in national legislation. The following areas are covered by the ISO/IEC 27000 series of standards' recommendations on how to comply with legal requirements: 1. Rights to intellectual property 2. Records administration 3. Regulations pertaining to data protection and privacy 4. Preventing the abuse of information processing infrastructure, and 5. Key information and cryptographic technology regulation 4.2.1 Laws that protect collection and storage The General Data Protection Regulation in the EU safeguards the right to privacy (GDPR). The 2018 Data Protection Act was used by the UK government to implement GDPR. The European Convention on Human Rights, which was integrated into UK domestic law as the Human Rights Act 1998, is the source of the right to privacy as well as other human rights in Europe. 54 CU IDOL SELF LEARNING MATERIAL (SLM)

The Health Insurance Portability and Accountability Act (HIPAA), which safeguards personal medical data, is one example of a federal sector-based regulation protecting privacy in the US. However, there is no general federal right to privacy in the US. State-based privacy legislation also exist. Under GDPR, provisions are in place to guarantee that businesses handling and storing personal information do so with acceptable security measures in place, as well as that any transfers of information outside of the EU are handled properly. This has implications for data transit to the US. The terms \"Data Controller\" and \"Data Processor\" are defined by GDPR. The Data Processor functions on behalf of the Data Controller and follows the Data Controller's instructions while using personal data. They are in charge of ensuring GDPR compliance and must be competent to do so. Data Processors are subject to certain regulatory requirements under GDPR, including the need to keep records of all processing actions and personal data. It covers data processing carried out by businesses based in the EU. Additionally, it applies to businesses outside the EU that provide goods or services to people inside the EU. It does not, however, apply to processing covered by the Law Enforcement Directive, processing necessary for maintaining national security, or processing done by individuals solely for domestic or personal use. The organization in charge of safeguarding information rights under GDPR in the UK is called the Information Commissioner's Office. 4.2.2 GDPR GDPR is based on six data protection principles: 1. The first principle emphasises that personal data must be treated in connection to the data subject in a way that is legitimate, just, and transparent. 2. The second principle stipulates that any personal data that is gathered must be done so for stated, specified, and lawful purposes and must not afterwards be treated in a way that is at odds with those aims. 3. According to the third principle, personal data must be adequate, relevant, and limited to what is required in relation to the purposes for which it is processed. 4. The fourth principle states that personal information must be true and, if necessary, kept current in respect to the processing goal. 5. The fifth principle stipulates that personal data must only be stored as long as necessary to fulfil the aims. 55 CU IDOL SELF LEARNING MATERIAL (SLM)

6. In accordance with the final principle, data processors must process personal data in a way that ensures suitable security, including protection against unauthorised or unlawful processing and accidental loss, destruction, or damage. The SEBI ACT 1992 This law was passed in order to control and advance the securities market. The security market is entirely under the control of SEBI. It is capable of conducting investigations into every adjudicated offence under the 1992 Act. This Act grants all market intermediaries the authority to register. If a company violates the act's rules in any way, SEBI has the authority to punish it in accordance with the act's rules. The Securities Contracts Stopping nefarious transactions in the securities market is the major goal of this law. With the help of this Act, the Central government will be able to enter into securities contracts, plan securities trading on a specific recognized stock exchange, and list securities on the stock market. The Indian Securities Market is only regulated by the Securities and Exchange Board of India. Its Preamble states that its primary purpose is to \"...guard the interests of investors in securities, to encourage the development of, to regulate, and for things associated with, or incidental thereto.\" In order to control the securities market, the Securities and Exchange Board of India (SEBI) was first constituted as a non-statutory entity in 1988. With the passage of the SEBI Act 1992 by the Indian Parliament, it was given statutory powers and became an independent organization on January 30, 1992. The Securities and Exchange Board of India Act, 1992 (15 of 1992) was passed on January 30, 1992, and its provisions established the Securities and Exchange Board of India as a statutory entity. Stock Exchange It has a significant impact on the capital market. It serves as a marketplace for the trading of securities, such as stocks, bonds, and other financial instruments. It assists in directing money from savings toward the various advanced economic sectors. This has some restrictions as well, 56 CU IDOL SELF LEARNING MATERIAL (SLM)

thus regulations are required to keep such actions under control. The Securities Contracts (Regulations) Act 1956 was passed by the central government as a result. The purpose of this Act is to either regulate the control of all securities or stop unfavourable transactions in securities. This Act addresses a number of stock exchange procedures, the listing of securities, broker operations, recognition of the stock exchange, rules, and guidelines for the market participants. Mobilization Of Saving The investor is protected throughout all market transactions. For those who can't afford to buy a lot of assets, investing can be done through mutual funds. It aids in boosting the small investors' confidence. 4.5 SUMMARY  A collection of documents known as a legal framework includes the constitution, laws, rules, and contracts. A legal hierarchy, as seen in the pyramid below, describes how these papers connect to one another and which has greater weight.  The legislation governing information technology, including computers and the internet, is known as cyber law or IT law. It oversees the digital distribution of information, software, information security, and e-commerce. It is related to legal informatics.  Similar to the Securities and Exchange Commission in the United States, the Securities and Exchange Board of India (SEBI) is the principal regulator of Indian securities markets.  The capacity to penalise offenders is just one of SEBI's many regulatory, investigation, and enforcement tools.  For lack of transparency and direct public accountability for an entity with such vast powers, some criticise SEBI. 57 CU IDOL SELF LEARNING MATERIAL (SLM)

4.6 KEYWORD  Microfinance—provided tods, fish or herd‖ and adds that it refers to all types of financial services provided to low-income households and enterprises.  Liquidity - It aids in ensuring the investment's liquidity. Any investor can liquidate or sell their securities on any trading day if they need money. This gives investors the assurance that they can convert their current security into cash.  Economic - It is a medium or platform where an investor can make investments in line with their interests. Trading entails both disinvesting and reinvesting. It provides investors with a variety of chances for capital development, which promotes economic expansion.  Capital market - A market where trading of financial securities, such as stocks, bonds, etc., takes place between buyers and sellers of those securities is referred to as a capital market. These markets have both individual and institutional buyers and sellers.  In both public and private markets, securities are fungible, tradeable financial instruments used to raise capital. 4.7LEARNING ACTIVITY 1. Define legal frame work 2. State the functions of framework 4.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is Board meeting? 2. What is limited liability partnership? 3. What do you mean by legal framework? 4. Explain GDPR 5. Explain what is a stock exchange? Long Questions 58 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Explain the laws that protect storage and collection? 2. What is a legal framework? 3. What is a security market? 4. Explain the SEBI Act 1992? 5. Explain the Laws that protect collection and storage? B. Multiple Choice Questions 1. The _______ demands are satisfied by the Securities and Exchange Board of India. a. Investors b. Market intermediaries c. Issuers of securities d. All of the above 2. Which of the following doesn't belong in the public sector? a. Reserve Bank of India (RBI) b. Securities and Exchange Board of India (SEBI) c. State Bank of India (SBI) d. Industrial Development Bank of India (IDBI) 3. State Bank of India, Securities and Exchange Board of India, Industrial Development Bank of India, and Reserve Bank of India (IDBI) a. Foreign exchange country act b. Foreign exchange finances act c. Foreign exchange funds act d. Foreign exchange management act 59 CU IDOL SELF LEARNING MATERIAL (SLM)

4. The Securities and Exchange Board of India meets the needs of a. Investors b. Market intermediaries c. Issuers of security d. All of the above 5. The Chairman of the Securities and Exchange Board of India can be reappointed for a period of a. Two years b. Three years c. One year d. None of these Answers 1-a, 2-b, 3-d, 4-d,5-a 4.9 REFERENCES References books  \"Market Entry Strategies,\" by C. Lymbersky, Management Laboratory Press, Hamburg, 2008, p. 364  Chapter 7 of corporate documents: Market Entry Techniques Textbooks  The official (ISC)2 guide to the CISSP CBK reference.  Cybersecurity blue team toolkit.  Threat modeling designing for security.  Cyber security policy guidebook Website  https://en.wikipedia.org/wiki/Market_entry_strategy  https://id4d.worldbank.org/guide/legal-framewo 60 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 5 GROWTH PROCESS STRUCTURE 5.0 Learning Objectives 5.1 Introduction 5.2 Role of savings 5.3 Growth factor in development 5.4 Role of private sector 5.5 Corporate Sector 5.6 Public sector 5.7 Summary 5.8 Keywords 5.9 Learning Activity 5.10 Unit End Questions 5.11 References 5.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Role of savings  Factors in development  Role of private sector & public sector  Corporate sector 5.1 INTRODUCTION Process development execution systems (PDES) are computer programmes that direct the creation of high-tech production processes like those for semiconductors, MEMS, photovoltaics, biomedical devices, and nanoparticles. These software solutions resemble product lifecycle management (PLM) systems in several ways. From idea to research and manufacturing, they direct the creation of new or enhanced technologies. In addition, they adapt the ideas of manufacturing execution systems (MES) systems for research and development rather than for production. PDES combines individuals (with various

backgrounds and potentially varying legal entities), data (from numerous sources), knowledge, and business processes. 5.2 ROLE OF SAVING Investment and savings are significant components of the global economy. Spending by households on finished products and services is referred to as consumption. Savings refers to the portion of disposable income that is not currently spent on purchases of capital goods (such as land, Equipment, building e.t.c). A society must consume less and save more of its current income if it invests more in capital. In order to experience higher consumption in the future, society must sacrifice its current consumption of commodities and services. Countries that save and invest a sizable portion of their income typically experience rapid increases in output, income, and wages. Private saving is a subcategory of savings. National saving, public saving, etc. Investments can be made in both tangible assets like real estate and intangible ones like education. Investments might be either Net investments or Gross investments, once more. The value of the whole investment after depreciation has been taken into account is known as the net investment. A gross investment is one that does not take depreciation into account. Investment refers to the acquisition of a security, such as a stock or a bond, in financial parlance. Consumption levels, population expansion, political stability or instability, income growth rates, and other factors can all affect saving. We are aware that saving has a greater impact on an economy than investment. Saving is therefore a very important aspect of investing. If the rate of saving rises, investment, capital accumulation, or production efficiency will also rise. Saving in personal finance Money used to buy stocks, put in an investment fund, or used to acquire any asset where there is an element of capital risk is considered an investment in the context of personal finance. This distinction is crucial because, unlike cash savings, investment risk can result in a capital loss when an investment is realised (s). Cash savings accounts are thought to carry a low level of risk. All banks in the US must have deposit insurance, which is normally provided by the Federal Deposit Insurance Corporation, or FDIC. A bank failure can, in rare circumstances, result in the loss of deposits, as it did at the beginning of the Great Depression. Since then, the FDIC has stopped that from happening. The terms investing and saving are sometimes used synonymously. For instance, banks frequently advertise their deposit accounts as investing accounts. Generally speaking, savings are when money is \"invested\" in cash. An investment is when money is used to buy an asset with the expectation that its worth will rise over time, even though the asset's market value may change. Saving in Economics Saving and investing are occasionally used interchangeably. Banks frequently promote their deposit accounts as investment accounts, for instance. Savings, in general, are times when money is \"invested\" 62 CU IDOL SELF LEARNING MATERIAL (SLM)

in cash. An asset is purchased with the intention of increasing its value over time, even though the item's market value may fluctuate. This is known as an investment. Intrest Rates According to traditional economic theory, interest rates would adapt to equalise saving and investment, preventing an accumulation of inventories (general overproduction). An increase in saving would lead to a decrease in interest rates, which would encourage investment. As a result, investment would always equal saving. However, John Maynard Keynes contended that neither saving nor investment were particularly responsive to interest rates (i.e., both were interest-inelastic), therefore significant adjustments in interest rates were required to bring them back into balance following a change in one. Furthermore, interest rates in the short term were governed by the demand for and supply of money stock. Savings may therefore outpace investment for an extended period of time, leading to a general surplus and a recession. 5.3 GROWTH FACTOR IN DEVELOPMENT A growth factor is a naturally occurring molecule that can promote cell growth, wound healing, and cellular differentiation sporadically. Typically, a secreted protein or steroid hormone is responsible. Growth factors are crucial for controlling numerous cellular processes. Growth factors frequently serve as agents of communication between cells. Cytokines and hormones are two examples of molecules that bind to particular receptors on the surface of their target cells. Growth factors differ in how often they stimulate cell differentiation and maturation. For instance, fibroblast growth factors and vascular endothelial growth factors increase blood vessel differentiation, while epidermal growth factor (EGF) improves osteogenic differentiation (angiogenesis). Investment is the purchase of capital assets, such as new offices, machinery, or technology. Aggregate demand (AD) includes investment, which also affects the capital stock and economic productivity (long-run aggregate supply) Evaluation Time elapses. If a company has already begun an investment project, an increase in interest rates is unlikely to alter the choice. The company will keep working to complete the investment. However, it will cause them to reconsider any upcoming investment endeavours. As a result, it may take some time for interest rate changes to take effect. other elements Economic conditions can be more important than interest rates. For instance, in 2009, interest rates were lowered from 5% to 0.5%, yet investment decreased as a result of the severe recession 63 CU IDOL SELF LEARNING MATERIAL (SLM)

and the banks' reluctance to lend. Although borrowing was affordable, this wasn't enough to spur investment in these conditions. Economic growth Companies invest to satisfy future demand. If demand is declining, businesses will reduce their investment. Businesses will increase investment if the economy looks better because they anticipate increased demand in the future. Strong empirical data supports the cyclical nature of investing. Investment declines during a recession and rises with economic expansion. Confidence Savings are safer than investing. Businesses won't invest unless they have faith in future prices, demand, and economic prospects. Keynes alluded to businessmen's \"animal spirits\" as a major factor in determining investment. Keynes observed that optimism wasn't always logical. Economic expansion and interest rates, as well as the general political and economic environment, will have an impact on confidence. Businesses may delay making investment decisions if there is uncertainty (such as political unrest), waiting to see how the situation plays out. Inflation Long-term inflation rates may affect investment decisions. High and fluctuating inflation tends to increase uncertainty and confusion, including doubts about the cost of investments in the future. Firms will be unsure about the final cost of the investment if inflation is high and variable. They may also be concerned that high inflation would cause economic instability and a future downturn. Investment rates have typically been greater in nations that have experienced sustained low and stable inflation. Productivity of capital Long-term changes in technology may have an impact on how appealing investments are. Businesses had a strong incentive to invest in new technology in the late nineteenth century since it was far more efficient than earlier technology, thanks to developments like Bessemer steel and improved steam engines. Businesses will reduce investment if the rate of technological advancement slows down since the returns on the investment will be reduced. Availability of finance Many banks were forced to curtail lending during the 2008 credit crisis due to a lack of liquidity. Banks were hesitant to provide money to businesses for investments. Therefore, despite historically low interest rates, businesses were unable to borrow money for investment, even though they wanted to. The amount of savings is another element that can affect long-term investing. A high level of savings makes it possible to invest more money. Banks are able to extend more credit when deposit levels are high. The quantity of money that can be used for investment is constrained if the economy's savings rate declines. Wage costs 64 CU IDOL SELF LEARNING MATERIAL (SLM)

A company may be motivated to strive to increase labour productivity by investing in capital stock if wage expenses are rising quickly. Businesses might be more likely to utilise more labor-intensive manufacturing techniques during a period of low wage growth. Depreciation The economic cycle does not determine every investment. For the purpose of replacing obsolete or worn-out equipment, some expenditure is required. Investment may also be necessary for a firm's normal growth. Investment will decline significantly during a recession, but not entirely because businesses may continue with ongoing initiatives or, eventually, be forced to fund less ambitious endeavours. Additionally, some businesses may want to invest or launch even during recessions. Government policies Investments may be more challenging due to certain governmental laws. For instance, restrictive planning regulations may deter investment. Government tax cuts and subsidies, on the other hand, can promote investment. The cost of investment has frequently been tacitly guaranteed or supported by the government in China and Korea. Greater investment has resulted from this, yet it may also have an impact on investment quality because there is less motivation to ensure that the investment has a high rate of return. 5.4 ROLE OF PRIVATE SECTOR It is impossible to exaggerate the importance of the private sector in supporting a nation's growth and economic development. Private businesses are the main generators of employment, funding, competitiveness building, and innovation - all crucial tools for growth. Due to its significant contribution to the national revenue as well as its role as a major employer and generator of jobs, the private sector is a crucial player in both urban and economic development. Around 90% of jobs in the developing world are in the private sector, which also offers essential goods and services, increases tax receipts, and promotes the effective flow of capital. Additionally, it will handle the majority of future urban growth (Venables, 2015: 5). It is becoming more and more urged to assist in maximising the benefits and minimising the drawbacks of growing urbanisation (see Topic Guides on State Business Relations, Sen 2015; and Inclusive Growth, Alexander, 2015). Urban governance is seen to involve private sector actors because they have an impact on whether cities develop in inclusive and sustainable ways, as well as on drivers of conflict and fragility such unemployment, exclusion, and instability. Interactive planning To encourage private sector participation in urban governance and to coordinate this participation with municipalities, interactive planning and decision-making processes are required. According to Pieterse (2000: 30-33), municipalities can improve urban governance in collaboration with the private sector by encouraging alliances and local economic development (LED) strategies that pool local knowledge, assets, and suggestions to energise the local economy and equip it to respond creatively to regional, national, and international economic changes. 65 CU IDOL SELF LEARNING MATERIAL (SLM)

By include groups and businesses in city-wide strategic planning processes, municipalities can better their relationships with domestic and international private sector interests while building collaborations. This can strengthen a city's commitment to a longer-term, more comprehensive vision. Based on the strategic objective of the municipality, this may entail a formalised relationship with organised business (such as PPPs). Providing managerial and technical training and support to municipalities to help them enhance the strategic management of urban areas is another example of an innovative collaboration (ibid.). 5.5 CORPORATE SECTOR 1. The beneficial connection between investment and is one of the most prominent linkages in economic life and economic expansion The quality and quantity of fixed capital and human capabilities are continuously increased, Since more than a century ago, OECD economies have seen an extraordinary rise in real income per individual. This advancement has also made it feasible to raise living standards. 2. The firm, which is constantly looking for the most effective ways to combine all the many resources needed to generate those goods and services that fulfil market demand, is at the very centre of the investment process. The economy's capacity to match commercially viable concepts with the financial resources needed to actually transform an idea into a profitable firm is of particular significance for a discussion on corporate governance. To develop a competitive company, there are undoubtedly other crucial inputs as well as finance. Additionally essential are skilled labour, management skill, and intermediary goods and services. Although having access to capital isn't a necessary requirement, it is in all actuality a vital one. 3. The capacity to raise economic wellbeing through capital production will depend on a number of factors, not only the total amount of available capital. The efficiency with which it is distributed across alternative investment options and, last but not least, how well its actual final usage by the firm is monitored, are both crucial factors. Society will surely pass up chances to create greater economic wellbeing if household savings and available business capital are not used to their best advantage. In such a situation, business owners won't be able to secure the money they need for lucrative projects, existing firms won't be able to grow, potentially valuable ideas won't ever see the light of day, etc. Additionally, critical industry-wide and individual company restructuring will be hindered, and productive assets will be locked into underperforming operations. 5 One of the main purposes of the financial system is to perform these three steps in the investment process: mobilise money, distribute capital among potential uses, and oversee the use of invested capital. They are carried out in market economies by a huge number of different individual investors, and the final result will largely depend on their unique abilities and incentives. The institutional structure of laws, rules, and business practises, 66 CU IDOL SELF LEARNING MATERIAL (SLM)

however, which shapes and influences the interactions between equity investors and the organisation, will also have a significant impact on the outcome. 6 The structure through which commercial corporations are led and managed is known as corporate governance. The corporate governance framework also includes components that are necessary for a successful conclusion at all stages of the investment process by defining the distribution of rights and obligations among the many participants in the corporation. 7 From the standpoint of economic policy, we may therefore draw the conclusion that the value of sound corporate governance extends well beyond the concerns of shareholders in a particular company. All phases of the investment process will be significantly hampered by a weak corporate governance structure, which will also negatively affect the economy's prospects for creating a solid private sector foundation for economic growth. The ability to mobilise savings will be harmed, as well as the effective distribution of financial resources and the correct oversight of business assets. 5.6 PUBLIC SECTOR An economy's public sector is that portion of the economy that, among other things, offers infrastructure, public transportation, public education, health care, and police and military services. The public sector is comprised of governments, other publicly controlled or sponsored organisations, businesses, and other organisations that provide goods or services to the general public. However, it is not always obvious if a certain organisation belongs under that aegis. In order to establish the limitations correctly, specific criteria must be found. Public Sector Methods 1. By building infrastructure: Without the construction of infrastructure, economic progress is not feasible. Public sector investments in infrastructure have paved the way for the growth of the nation's agricultural and industrial sectors, contributing to overall economic growth. These investments have been made in areas like power, transportation, communication, basic and heavy industries, irrigation, canals, education, and technical training. These infrastructure facilities built by the public sector of the nation rely on contributions from the private sector as well. 2. Strong industrial foundation: The public sector has also made a substantial contribution by building the nation's robust industrial infrastructure. The economy's industrial base has been greatly bolstered by the growth of public sector businesses in a variety of industries, including iron and steel, coal, heavy engineering, heavy electrical machinery, petroleum and natural gas, fertilisers, chemicals, and pharmaceuticals. Additionally, the growth of private sector industries is mostly attributable to these industries. The public sector has provided the foundation for the nation's quick industrialisation by building a strong 67 CU IDOL SELF LEARNING MATERIAL (SLM)

industrial base. In addition, the public sector has dominated important industries like coal, copper, lead, steam and hydro turbines, and so forth. 3. Possibilities for employment: Redistribution of resources can also come via employment in the public sector. Governments may unintentionally drain resources from more affluent regions of the economy to pay those jobs when, for instance, they add more public sector jobs in less wealthy areas with more unemployment and lower salaries. This occurs as public sector pay are more consistently paid and tax collection is unified. Additionally, the growth of public sector employment has a substantial impact on the composition of the economy's various sectors. The public sector offers positions in administration, defence, and other government functions. 4. The public sector aids in a nation's economic development by fostering rapid economic growth through the construction and expansion of infrastructure. As a result, it creates work possibilities, which further aid in the growth of a nation's financial resources. 5. Capital Formation: The public sector has significantly impacted the nation's gross domestic capital production. In India, the public sector now accounts for 9.2 percent of gross domestic capital formation, up from just under 3 percent in the first five years of the plan. Comparative public sector gross capital formation rates in the nation also altered, rising from 33.67 percent under the First Plan to 50 percent during the Sixth Plan before dropping to 21.9 percent in 2005-2006. 6. Import substitution and export promotion: Some public sector companies have a history of achieving import substitution and preserving the nation's priceless foreign exchange. The Oil and Natural Gas Commission, Indian Oil Corporations, Bharat Heavy Electricals Limited (BHEL), and Bharat Electronics Ltd. should be highlighted in this context (ONGC). Hindustan Antibiotics Ltd. (HAL), as an illustration, has paved the way for import substitution in India. 7. The central exchequer receives a sizable amount of money from public sector companies in the form of profits, excise duty, customs duty, corporation taxes, and other sources that contribute to community development. A country's economic development can be summed up as long-term increases in per capita income along with an improvement in the standard of living. The majority of the assets in the public sector are owned by the government, which also offers a range of services for the benefit of the general populace. Both the Indian Oil Corporation and the Steel Authority of India are owned by the government. 5.7 SUMMARY  Growing an investor's capital is the main goal of the investment style and technique known as growth investing. Growth stocks, or young or tiny businesses whose earnings are anticipated to increase at an above-average rate compared to their industry sector or the broader market, are the type of securities that growth investors typically invest in.  Many investors find growth investing to be very appealing since purchasing shares in emerging firms can result in substantial returns (as long as the companies are successful). But because they haven't been tested, these businesses frequently carry a high level of risk. 68 CU IDOL SELF LEARNING MATERIAL (SLM)

 Value investment and growth investing can be compared. Choosing stocks that appear to be trading for less than their intrinsic or book worth is part of the value investing technique. you have organized yourself. Some groups are small, private and escorted, while others large. 5.7 KEYWORDS  Capital Formation: Capital formation is the net capital accumulation during an accounting period for a particular country. The term refers to additions of capital goods, such as equipment, tools, transportation assets, and electricity.  Robust: strongly formed or constructed  Increased output of products and services is referred to as economic growth.  Economic growth can be influenced by changes in capital goods, labour force, technology, and human capital.  Using estimates like the GDP, economic growth is frequently calculated as the rise in the total market value of newly created products and services.  Growth accounting is a quantitative method for analysing how various elements affect GDP growth as a whole.  Three elements are primarily examined by the growth accounting equation: labour, capital, and technology. 5.8 LEARNING ACTIVITY 69 1. Define market growth 2. Name the sectors in development 5.9 UNIT END QUESTIONS A. Descriptive Questions 1. What is wage cost? 2. What are the role of private sector? 3. Define personal finance savings. 4. what is interest rates? 5. What is saving other factors in development? Short Questions 1. Name the growth factor in development. CU IDOL SELF LEARNING MATERIAL (SLM)

2. Explain the growth factor in development? 3. Describe Depreciation and government policies? 4. What is an Interactive planning? 5. Explain the role of public sector? Long Questions: 1. What is a public sector and corporate sector? 2. Explain effects of Inflation. 3. What is the growth factor in development? 4. What is an interest rate? B. Multiple Choice Questions 1. As economic development proceeds, income inequality tends to follow a(n) __________ curve a. Convex b. Inverted U-shaped c. L-shaped d. S-shaped 2. Income inequalities are often shown on a a. production possibility curve b. marginal inequality curve c. Sen curve d. Lorenz curve 3. Economic growth can be measured by a. The CPI b. The CBI 70 CU IDOL SELF LEARNING MATERIAL (SLM)

c. GDP d. MPC 4. To boost economic growth the government is most likely to a. Increase interest rates b. Increase taxation rates c. Provide incentives to invest d. Provide incentives to save 5. Which of the following explains the term economic growth? a. Increase in per capita production b. Increase in per capita real income c. structural change in the economy d. All of the above Answers 1-b, 2-d, 3-c, 4-c, 5-d 5.11 REFERENCES References book  Us.axa.com asks \"What's the difference between growth investing and value investing?\" Advisors AXA. obtained on January 5, 2015.  2010-06-07, doi:10.4016/18341.01 Roll up Banner stands | Roll up Banner | Roll up Stands.  To the Shareholders of Berkshire Hathaway Inc. (1989), Warren Buffett. obtained on March 13, 2016. Textbook references  To the Shareholders of Berkshire Hathaway Inc. (1992), Warren Buffett. obtained on January 14, 2016.  Mr. Robert J. Barro (2000). A Panel of Countries' Inequality and Growth. Economic Growth Journal. 71 CU IDOL SELF LEARNING MATERIAL (SLM)

 Paul Krugman wrote \"The Myth of Asia's Miracle\" in Foreign Affairs in 1994. Website  https://www.investopedia.com/terms/g/growthinvesting.asp  https://www.oecd.org/investment/investmentfordevelopment/1959815.pdf  https://www.sciencedirect.com/science/article/abs/pii/0305750X9090100C 72 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 6 FINANCIAL SYSTEM IN INDIA STRUCTURE 6.0 Learning Objectives 6.1 Introduction 6.2 RBI 6.3 Financial System 6.4 Experimental Finance 6.5 Summary 6.6 Keywords 6.7 Learning Activity 6.8 Unit End Questions 6.9 References 6.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe nature of human resource management  Identify scope of human resource  State the need and importance of HRM  List the functions of HRM  Global financial system 6.1 INTRODUCTION One of the most crucial factors in our nation's economic development is the Indian Financial System. This system controls the flow of money between the nation's citizens (household savings) and those who can intelligently invest it (investors/businessmen) for the benefit of both parties. With regard to the numerous Government tests held throughout the nation, this is a crucial subject, so applicants should carefully consider reading this article and preparing themselves accordingly. 73 CU IDOL SELF LEARNING MATERIAL (SLM)

You will learn about the Indian Financial System, its elements, and how it contributes to a nation's economic development in this article. Further down in this post, you may find more Sample Questions on the Indian Financial System. A nation's financial system is primarily responsible for controlling and administering the processes involved in the creation, transfer, and holding of all types of financial assets and instruments. 6.2 RBI Fig 6.1 RBI The Reserve Bank of India, mostly known as RBI, is the country's central bank and the regulatory organisation in charge of overseeing the country's banking industry. The Government of India's Ministry of Finance is the owner. Control, issuance, and supply maintenance of the Indian rupee are its duties. It also oversees the primary payment networks for the nation and tries to advance its economic growth. One of the RBI's specialised departments, Bharatiya Reserve Bank Note Mudran (BRBNML), operates two currency printing presses in Nashik, Western India, and Dewas, producing and minting Indian rupee notes (INR) (Central India). To control the payment and settlement systems in India, RBI established the National Payments Corporation of India as one of its specialised divisions. The RBI created the Deposit Protection and Credit Guarantee Corporation as one of its specialised divisions with the goal of providing insurance for deposits and credit facility guarantees to all Indian banks. Additionally, it had complete authority over monetary policy in the nation up until the Monetary Policy Committee was founded in 2016. In compliance with the Reserve Bank of India Act, 1934, it began operating on April 1st, 1935. The initial share capital was split into 100 fully paid shares. On 1 January 1949, the RBI was nationalised after India gained its independence on 15 August 1947. The 21-member central board of directors, which includes the governor, four deputy governors, two representatives from the finance ministry (typically the Economic Affairs Secretary and 74 CU IDOL SELF LEARNING MATERIAL (SLM)

the Financial Services Secretary), ten government-nominated directors, and four directors who represent local boards for Mumbai, Kolkata, Chennai, and Delhi, is responsible for the overall direction of the RBI. Five people who represent local interests, co-operative and indigenous bank interests make up each of these local boards. Narendra Modi, the Indian prime minister, introduced two new programmes on November 12, 2021, with the goal of increasing investment opportunities and enhancing investor protection. The Reserve Bank Integrated Ombudsman Scheme and the RBI Retail Direct Scheme are the two new programmes. [12] The RBI Retail Direct Scheme is designed to make investing in government securities simple for retail investors. According to the RBI, the programme will make it free for individual investors to open and maintain an account for government securities. The goal of the RBI Integrated Ombudsman Scheme is to significantly enhance the grievance redress process for handling customer complaints against the central bank's regulated firms. All Indian banks are required by the RBI to keep a safe box in their individual strong rooms. Regional Banks and SBI branches in remote locations are the only exceptions, but they are required to have a strong room. History Following the passage of the Reserve Bank of India Act in 1934, the Reserve Bank of India was founded. Although initially privately owned, it was nationalised in 1949 and has since been entirely owned by the Government of India's Ministry of Finance (GoI). The Reserve Bank of India was established in accordance with the principles outlined in Dr. B.R. Ambedkar's book, \"The Problem of the Rupee - Its Origin and Its Solution,\" which he presented before the Hilton Young Commission (also known as the Royal Commission on Indian Currency and Finance). The Hilton Young Commission recommended that the Reserve Bank of India be established in 1926. The Reserve Bank of India's authorised capital at the time of its founding was 5 crores. The government contributed only 20–22 lakhs Structure The primary committee of the central bank is the central board of directors. The directors are chosen by the Indian government for a four-year tenure. The board is composed of a governor, up to four deputy governors, four directors to represent regional boards, two from the Ministry of Finance—typically the Economic Affairs Secretary and the Financial Services Secretary— as well as ten other directors from diverse industries. Under Raghuram Rajan's leadership, the Reserve Bank sought to reassign duties among the five of them by creating the position of chief operating officer (COO), a deputy governor (four deputy governor and COO) Traditionally, two of the four deputy governors are chosen from among the executive directors of the bank and come from the ranks of the RBI. One is chosen from from the public sector bank chairpersons, while the other is an economist. A member of the Indian Administrative 75 CU IDOL SELF LEARNING MATERIAL (SLM)

Service may be appointed as the RBI's deputy governor and eventually its governor, as happened in the cases of Y. Venugopal Reddy and Duvvuri Subbarao. Ajay Tyagi, Anjuly Duggal, Prof. Damodar Acharya, Nachiket Mor, and Y. C. Deveshwar are additional members of the RBI's central board of directors. Functions Any nation's central bank performs a variety of tasks, including managing foreign exchange, directing monetary policy, producing currency, acting as a bank for the government, and banking for established commercial banks. Additionally, it aids in the nation's general economic expansion. The Reserve Bank of India's preamble outlines its primary functions. Development role To promote national goals and industries, the central bank must carry out a variety of promotional tasks. [21] Numerous inter-sectoral and local inflation-related issues confront the RBI. Some of these issues are a result of the public sector's predominance. Priority Sector Lending for industries like agricultural, micro and small enterprises (MSE), housing, and education is one of the main strategies in this effort. In order to incorporate a significant portion of society in the banking network, RBI works to strengthen and assist small local banks and encourages banks to open branches in rural areas. 6.3 FINANCIAL SYSTEM Financial systems can be identified everywhere there is an interchange of a financial medium (money), while funds are reallocated to underserved sectors (financial markets, businesses, banks) in order to take use of the potential of ideal money and put it to use in order to reap its benefits. The term \"financial system\" refers to the entire apparatus. Financial systems use money, credit, and finance as transaction mediums. They provide as an alternative to bartering by acting as a known-value medium of exchange for goods and services. Public or private banks, financial markets, financial instruments, and financial services can all be found in a modern financial system. Financial systems enable people and businesses to share the risks involved in the allocation, investment, or transfer of funds between economic sectors. Financial theory The fields of management, (financial) economics, accountancy, and applied mathematics all study and develop financial theory. Abstractly, finance is concerned with the deployment and investment of assets and liabilities over \"space and time,\" i.e., executing asset allocation and valuation today based on risk and uncertainty of future outcomes while effectively considering 76 CU IDOL SELF LEARNING MATERIAL (SLM)

the time value of money. Finance theory therefore places a lot of emphasis on calculating the present value of these future values, or \"discounting,\" at the risk-appropriate discount rate. There have recently been attempts to compile a list of unresolved issues in finance because the argument over whether finance is an art or a science is still up for debate. Managerial finance The area of management known as managing finance is concerned with the managerial application of financial theory and procedures, with a focus on the financial implications of managerial choices. Assessments are made from the perspectives of planning, directing, and controlling managers. The methods discussed and created are primarily related to managerial accounting and corporate finance: the former enables management to better comprehend financial data related to profitability and performance and, as a result, act on it; the latter, as mentioned above, focuses on optimising the overall financial structure, including its effects on working capital. The above description of financial management is how these strategies are put into practise. Most academics working in this field are based in accounting, management science, or finance departments at business schools. Financial economics In contrast to real economic variables, such as products and services, financial economics is the area of economics that examines how financial variables, such as prices, interest rates, and stock prices, interact. As a result, it focuses on pricing, decision-making, and risk management in the financial markets and generates many of the widely used financial models. (The area of financial economics known as financial econometrics use econometric methods to parameterize the hypothesised correlations.) Financial mathematics The area of applied mathematics that deals with financial markets is known as financial mathematics. The three domains mentioned are the main components of the field, which is known in practise as quantitative finance and/or mathematical finance. Regarding theory, the discipline is primarily concerned with the modelling of derivatives, with particular emphasis on interest rate- and credit risk modelling. Other crucial fields include insurance mathematics and quantitative portfolio management. In a similar vein, the methods created are used to price and hedge a variety of asset-backed, governmental, and corporate securities. These mathematically divide into two analytic branches: risk-neutral probability (or arbitrage- pricing probability) is used in derivatives pricing and is denoted by \"Q,\" whereas actual probability (also known as actuarial or physical probability) is typically used in risk and 77 CU IDOL SELF LEARNING MATERIAL (SLM)

portfolio management and is denoted by \"P.\" Through the aforementioned \"Fundamental theory of asset pricing,\" these are connected. Financial mathematics closely relates to financial economics, which, as mentioned above, is concerned with much of the underlying theory involved in financial mathematics. Financial mathematics will typically derive and extend the mathematical models presented. The area of (applied) computer science known as computational finance deals with financial issues that have a practical application, and particularly highlights the numerical techniques used in this case. 6.4 EXPERIMENTAL FINANCE In order to experimentally observe and study agent behavior and the consequent characteristics of trading flows, information diffusion and aggregation, price setting mechanisms, and returns processes, experimental finance tries to create various market settings and surroundings. Experimental finance researchers can examine the amount to which current financial economics theory produces accurate predictions and thereby demonstrate them. They can also try to identify new principles on which such theory might be expanded and used to inform future financial decisions. Research can continue by setting up and observing human behavior in artificial, competitive, market-like environments or by performing trading simulations. Behavioral finance When making a choice that may have an effect on one of these areas, whether negatively or favorably, behavioral finance is important to consider. This field of study looks at how investors' and managers' psychology influence financial decisions and markets. It is feasible to connect what actually occurs in financial markets with analysis based on financial theory with more in-depth study of behavioral finance. Over the past few decades, behavioral finance has developed into a crucial component of finance. Topics covered by behavioral finance include: 1. Empirical investigations showing substantial departures from conventional beliefs; 2. Models explaining how psychology influences trade and prices; 3. Utilising these techniques to forecast; 4. Studies on experimental asset markets and the forecasting of experiments using models. 78 CU IDOL SELF LEARNING MATERIAL (SLM)

Quantitative behavioral finance is a branch of behavioral finance that employs statistical and mathematical methods to comprehend behavioral biases in relation to valuation. Quantum finance In order to tackle financial difficulties, the interdisciplinary discipline of quantum finance applies theories and techniques created by economists and quantum physicists. It is a subfield in economics. The pricing of financial instruments, such as stock options, is a significant part of finance theory. There are many issues affecting the financial community for which there is no proven analytical solution. Numerical techniques and computer simulations have therefore become widely used to solve these issues. The field of study in question is called computational finance. Numerous computational finance problems are computationally hard and take a while to solve on traditional computers. The necessity to react to swiftly shifting markets adds additional complexity, especially when it comes to option pricing. For instance, in the practically continuously fluctuating stock market, the computation must be finished before the next change in order to benefit from wrongly priced stock options. The financial world is constantly looking for solutions to the performance problems that stem from price alternatives. This prompted research that uses alternative computer methods in the field of finance. Quantum continuous models, quantum binomial models, multi-step quantum binomial models, etc., are the most often utilised quantum financial models. 6.5 SUMMARY  The study and system of money, investments, and other financial tools are together referred to as finance.  Public finance, corporate finance, and personal finance are the three main divisions of finance.  Social finance and behavioural finance are more recent subcategories of finance.  Finance and financial activities have a long history that extends back to the beginning of civilization.  As early as 3000 BC, banks and interest-bearing loans already existed. As early as 1000 BC, coins were in use.  Finance has origins in the sciences, including statistics, economics, and mathematics, but it also incorporates non-scientific components that make it more akin to an art. 79 CU IDOL SELF LEARNING MATERIAL (SLM)

6.6 KEYWORD  What is Finance ― The term \"finance\" refers to issues including the development, management, and study of money and investments. It entails employing future income flows to finance current initiatives through the use of credit and debt, securities, and investment. Finance is strongly tied to the time value of money, interest rates, and other related topics because of its temporal component.  The bottom line - The word \"finance\" is a general one that covers a wide range of activities. However, in essence, they are all about managing money—acquiring, spending, and everything in between, from borrowing to investing. In addition to activities, finance also refers to people's use of tools and instruments in relation to money as well as the institutions and structures that support such activities.  A financial system is a collection of organisations and procedures that are used to facilitate the exchange of funds on a global, regional, or firm-specific level.  Market-based principles, centralised planning, or a combination of the two can be used to organise financial institutions.  A financial system includes a variety of institutions, such as banks, stock exchanges, and government treasuries. 7.7LEARNING ACTIVITY 1. Define finance 2. State the principles of microfinance ___________________________________________________________________________ ___________________________________________________________________________ 6.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is a financial system? 2. Advantages and disadvantages of Indian financial system? 3. What do you understand by Non-banking financial company? 4. Explain the concept of Mutual fund? 5. How does the financial system in India works? 80 CU IDOL SELF LEARNING MATERIAL (SLM)

Long Questions 1. Explain the role of Reserve Bank of India? 2. What is the financial theory? 3. Define Quantum finance and its use? 4. What is development role and functions? 5. Explain the fundamentals of global financial system? B. Multiple Choice Questions 1. Which among the following financial instruments are dealt by Primary Dealers? a. Bonds b. Mutual funds c. Government securities d. Debentures 2. Which of the following is not a regulatory institution in Indian financial system? a. RBI b. CIBIL c. SEBI d. IRDA 3. Financial institutions are also known as ______________. a. Financial organization b. Financial intermediaries c. Financial system d. All of the above 4. _________ is regarded as a queen of Indian financial system 81 a. SEBI CU IDOL SELF LEARNING MATERIAL (SLM)

b. RBI c. Finance Ministry d. BSE Answers 1-c, 2-b, 3-b. 4-b 6.9 REFERENCES References books  Investopedia, \"Finance\" by Adam Hayes. Retrieved August 3, 2022.  Justin Marlowe and Sharon Kioko (2016). Public managers should have a financial strategy. ISBN 978-1-927472-59-0. Rebus Foundation.  courses.lumenlearning.com, \"Introducing the Financial System | Boundless Economics.\" retrieved on May 18, 2020.  The financial system is what, exactly? Economy. Textbooks  Robert Kiyosaki and Sharon Lechter's book Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! WB Books for Business.  John Bogle Bogle (2007). The Small Book of Sense-Based Investing  Thomas J. Stanley and W.D. Danko (1998). The Rich Guy Next Door Website  https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-finance- definition/  http://www.donchance.com/Instructional/DerivativesCourseusingTeachingNotes.htm  https://gsdrc.org/professional-dev/public-financial-management/ 82 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 7 MOKEY MARKET STRUCTURE 7.0 Learning Objectives 7.1 Introduction 7.2 Characteristics 7.3 Discount and finance house 7.4 Operation of DFHI 7.5 Summary 7.6 Keywords 7.7 Learning Activity 7.8 Unit End Questions 7.9 References 7.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe nature of human resource management  Identify scope of human resource  State the need and importance of HRM  List the functions of HRM 7.1 INTRODUCTION The trading of very short-term debt investments is referred to as the money market. It involves substantial trades between institutions and dealers at the wholesale level. Retail money market accounts opened by bank clients and money market mutual funds purchased by individual investors are included. The money market is distinguished by a high level of safety and relatively low rates of return in each of these scenarios. One of the foundational elements of the world financial system is the money market. It entails huge overnight cash transfers between banks and the US government. The vast majority of money market transactions are wholesale exchanges between businesses and financial institutions.

Banks that lend to one another and to large corporations on the time deposit and eurocurrency markets are examples of institutions that participate in the money market, as are businesses that raise capital by offering commercial paper to the market that can be purchased by other businesses or funds and investors who buy bank CDs as a secure place to store cash temporarily. As parts of money market mutual funds and other assets, some of those wholesale transactions eventually end up in the hands of investors. 7.2 CHARACTERSTICS A market for financial assets that are close substitutes for money is known as the money market. It is a market for overnight short-term investments and financial products with maturities of one year or less. It is a telephone-based activity rather than a physical location (like the stock market). A crucial component of the Indian financial system is the money market. The following are the money market's characteristics: 1. It is a collection of markets for various instruments rather than a single market. 2. The marketplace for short-term debt instruments is wholesale. 3. Its main characteristic is honour, where the participants' creditworthiness is significant. 4. The key participants are the Reserve Bank of India (RBI), Discount and Finance House of India (DFHI), mutual funds, banks, corporate investors, non-banking finance companies (NBFCs), state governments, provident funds, and primary dealers. Public sector organisations (PSUs), non-resident Indians, and international corporate entities, as well as the Securities Trading Corporation of India (STCI). 5. The market is founded on needs, and it is shaped by the supply and demand of financial resources. What the Money Market Does: A money market should typically fulfil the following three tasks: 1. Establish a method for balancing the supply and demand for short-term money. 2. Establish a focal point for central bank action to affect the level of interest rates in the economy generally and liquidity. 84 CU IDOL SELF LEARNING MATERIAL (SLM)

3. Give suppliers and consumers of short-term funds sufficient access to enable them to meet their borrowing and investment needs at a price that effectively clears the market. In addition to the aforementioned purposes, a healthy money market promotes the growth of a market for longer-term assets. For longer-term financial products, the interest rates for borrowing money on an incredibly short time horizon serve as a benchmark. Advantages of a Competitive Money Market A healthy money market is advantageous to many participants. In addition to deposits, it gives banks a reliable stream of money that enables competition and various financing models. It enables banks to control the maturity structure of their assets and liabilities as well as interest rate risk management. The foundation for money growth and liquidity, including the secondary market for commercial paper and government notes, is a developed interbank market. The growth of non-bank intermediaries is promoted by an effective money market, boosting the competition for capital. There is a large selection of savings vehicles available for investors to choose from. Borrowers can effectively obtain long-term financing from a liquid money market. Large borrowers can reduce the cost of raising capital and effectively manage short-term funding or excess. The growth of a capital market, foreign exchange market, and market for derivative instruments requires a liquid and active money market. The money market helps the long-term debt market by making securities more liquid. An effective money market is a requirement for the growth of a market for government securities and a forward foreign exchange market. A liquid money market also supports the trading of forwards, swaps, and futures because these transactions require the assurance of fast cash settlement. Because it gives a variety of purchasers access to its debt, the government can get a better price for it. It makes government market borrowing easier. If the money market is liquid, indirect monetary management techniques like repos and open market operations are more effective. In such a situation, the market reacts to the central bank's policy decisions more quickly and with less distortion. Who uses Money Market? Commercial paper is a popular borrowing option in the wholesale market because it offers a wider range of maturities, from overnight to 270 days, and has higher interest rates than Treasury bills or bank time deposits. 85 CU IDOL SELF LEARNING MATERIAL (SLM)

However, compared to bank or government instruments, commercial paper carries a substantially larger risk of default. By purchasing money market funds, short-term CDs, municipal notes, or U.S. Treasury bills, individuals can invest in the money market. Local banks and the TreasuryDirect website are two retail options for individual investors in the money market. Another way to invest in the money market is through brokers. In the money market, the United States government offers Treasury bills with maturities ranging from a few days to one year. Large quantities are purchased by primary dealers from the government to be traded among them or sold to individual investors. They can be purchased by individual investors directly from the government through its TreasuryDirect website, a bank, or a broker. Additionally, short-term notes are issued by municipal, county, and state governments. Money market funds aim to maintain a constant net asset value (NAV) of $1 while pursuing stability and security. Types of money market instruments Money Market Funds Only businesses and financial organisations that lend and borrow money in sums ranging from $5 million to far over $1 billion per transaction are allowed to participate in the wholesale money market. Individual investors can purchase baskets of these products from mutual funds. Such funds' net asset values (NAV) are supposed to remain constant at $1. One fund dropped below that amount during the financial crisis of 2008.Due to the subsequent market panic and large withdrawal from the funds, access to riskier assets was ultimately further restricted. Money market account One kind of savings account is the money market account. Although some issuers give account holders restricted powers to periodically withdraw money or write cheques on the account, they all pay interest. Federal laws set limits on withdrawals. The bank instantly transforms it to a checking account if they are surpassed.) A money market account normally receives a monthly credit from the bank along with daily interest calculations. Money market accounts typically offer marginally better interest rates than traditional savings accounts. However, since the financial crisis of 2008, the spread between rates for savings and money market accounts has shrunk significantly. Depending on the amount deposited, money market account average interest rates change. The best money market account with no minimum deposit was yielding 0.56% yearly interest as of August 2021. Advantages and Disadvantages of Money Market 86 CU IDOL SELF LEARNING MATERIAL (SLM)

Money market investments include a number of benefits and drawbacks. Due to the protection of FDIC insurance, backing by a government or bank, or the high creditworthiness of the borrowers, the majority of money market assets are regarded as having an exceptionally low risk. Additionally, they are relatively liquid, making quick exchanges for cash possible. These investments' poor returns are a trade-off for their minimal risk. Money markets not only perform worse than other asset types, but frequently even lag behind inflation. Additionally, any account fees could significantly reduce those meagre earnings. Furthermore, not all money market securities have these benefits. Even the most reliable borrowers could default because some of them are not FDIC insured. Some money market accounts have minimum balance standards or withdrawal limitations. 7.3 DISCOUNT AND FINANCE HOUSE A discount house is a business that focuses on trading, discounting, and negotiating promissory notes or bills of exchange in the financial industry. Its transactions are typically carried out on a big scale and involve transactions involving Treasury bills and bonds as well. Discount houses, also referred to as bill brokers, operated mostly in the United Kingdom and were crucial to the country's financial system up until the mid-1990s. By the year 2000, British discount houses were no longer primarily independent financial institutions. Although some still operate in India and other countries, they are no longer distinct financial institutions. Understanding a Discount House Discount houses, which date back to the 1820s, were formerly crucial to London's money market system. They acted as money lenders, purchasing and discounting bills of exchange as well as other financial products like banker's acceptances, government bonds, and money market securities (BA). They contributed to the secondary money market's liquidity by offering a quick market for short-term government-guaranteed securities and other money market instruments and discounting short-term liabilities for other financial institutions in need of capital. A discount house negotiated the purchase of different certificates of deposit (CDs), commercial paper, and other money market instruments mentioned above at less than par value and served as an intermediary between a lender and a borrower. A discount house specialised in discounting short-dated financial securities. Through these short-term securities, they were able to borrow money from commercial banks at a rate that was lower than the market rate and lend it to borrowers at a rate that was just a little higher. The interest rate difference gave the discount house a profit. 87 CU IDOL SELF LEARNING MATERIAL (SLM)

Discount banks and financial system To address daily fund and credit shortages in the interbank market, the Bank of England (BoE) engaged in direct negotiations with discount firms. The Bank performs open market operations, which entail increasing or decreasing the volume of assets held with the Bank, to control the amount of money in the economy. It used to only do this by providing government-backed securities or commercial paper loans to discount houses. The commercial banks were able to meet their brief demands for loanable funds or cash reserves thanks to the discount houses' use of the loans to buy money market assets from them. By doing thus, the discount houses served as a bridge between England's commercial banking sector and the country's central bank. The Bank of England can regulate the cost of borrowing and, consequently, the amount of money in circulation by raising or lowering the discount rate, which is the rate at which the central bank lends reserves to its banking system. To give loans to commercial banks, a discount house did not always need to first borrow money from the central bank. It also worked in the opposite circumstance. Banks in need of capital would provide their commercial paper to the discount house in exchange for a minor spread. These notes would be offered to organisations with extra income, which would then supply the money for the loans. The Bank of England then rediscounted the bills for the discount house, maintaining a direct connection to the money market and the market's current interest rates. Decline of the discount house The informal network of bill brokers that bought bills of exchange and sold them to the Bank of England gave birth to the discount house system, which was formally established in Britain following the 1825 financial crisis. For 150 years, hardly any change occurred. There were 12 discount houses, all headquartered in the City (the financial centre of London), and they controlled all daily transactions involving bills of exchange and, to a lesser extent, gilts with the Bank of England (British government securities, similar to U.S. Treasury bills and bonds). In the early 1980s, competition for the services of discount houses was first brought on by electronic trading, the introduction of derivatives markets, and the expansion of the repo market. But in the middle of the 1990s, when the Bank of England started drastically altering how it set interest rates and controlled the money supply, their demise was heralded. By allowing a wide range of banks, building societies, and securities businesses, both based in Britain and abroad, to transact in short-term money market instruments, it put an end to the discount houses' privileged position in 1996. Participants in money market The following are the main players in the money market who provide and demand funds: 88 CU IDOL SELF LEARNING MATERIAL (SLM)

I) Reserve Bank of India: The Reserve Bank of India oversees India's money market. As the central bank, it expands the banking system when there is insufficient liquidity and contracts it in the opposite case. ii) Banks: The two main players in the Indian money market are commercial banks and cooperative banks. Through the acceptance of deposits, they mobilise public savings and lend it to companies for their short-term working capital needs. Although some of these deposits are used to finance the government's short-term needs by investing in Treasury Bills while also investing in medium- and long-term government securities, corporate shares, and bonds. The short-term surpluses are used in a variety of money market instruments. Discount and Finance House of India Ltd. (DFHI) is a money market instrument trading company. As a result, it has aided in the expansion of both secondary markets and money market products. iv) Financial and Investment Institutions: These organisations (such as LIC, UTI, GIC, Development Banks, etc.) are only permitted to participate as lenders in the call money market. v) Corporates: Businesses compel the banking system to provide them with funds. They issue commercial paper to raise short-term capital straight from the money market. Additionally, they engage in intercorporate deposits and investments in addition to accepting public deposits. vi) Mutual Funds: Mutual funds also invest their excess cash in a variety of short-term money market securities. Additionally, they are allowed to take part in the call money market. In order to mobilise short- term assets for investments in money market instruments, money market mutual funds have been created. 7.4 OPERATION OF DFHI The RBI established the Discount and Finance House of India (DFHI) in collaboration with public sector banks and all-India financial institutions in response to the Vaghul Working Group's recommendation for the creation of an entity to offer increased liquidity to the money market instruments. DFHI was established in March 1988, and it started operating in April of that same year. By creating a vibrant secondary market for money market instruments, this money market institution's primary goal is to make it easier to smooth out short-term liquidity imbalances. It has 250 crores of rupees in authorised capital. The RBI doesn't buy back Treasury bills before they mature. Similar to that, items cannot be bought from the RBI outside of the fortnightly auctions. By purchasing and selling these bills on the secondary market, DFHI closes this deficit. Corporate companies and other bodies can 89 CU IDOL SELF LEARNING MATERIAL (SLM)

now invest their short-term surpluses and convert them to cash as needed thanks to DFHI's presence in the secondary market. In order to add liquidity to various money market instruments, the RBI extends reliance limits to the DFHI against the holdings of bills of exchange and the collateral of treasury bills. The DFHI was able to provide ever-higher amounts of liquidity during the period of austerity seen in the money market thanks to the periodic enhancement of such restrictions. Following the 1992 revelation of anomalies in transactions in the money and securities markets, there was a decline in total trading volumes across nearly all of the money market's categories. Even in 1993–1994 the DFHI's business turnover in the treasury bills and commercial bills segments remained muted. The call money market's favourable conditions discouraged secondary market trades in Treasury Bills. In the money market, treasury bills with terms of 91 days and 364 days are both increasingly popular. The volume of bills available for discount or rediscount has decreased as a result of the actions the RBI took over the past year to ensure that recourse to bill finance only occurs in respect of genuine bills of exchange resulting from the movement of goods and within the credit limits of borrowers. In response to the recommendations of the Vaghul Working Group, the Reserve Bank of India (RBI) established Discount & Finance House of India Limited in collaboration with Public Sector Banks and All-India Financial Institutions to deal in money market instruments. The RBI established the Discount and Finance House of India (DFHI) in collaboration with public sector banks and all-India financial institutions in response to the Vaghul Working Group's recommendation for the creation of an entity to offer increased liquidity to the money market instruments. DFHI was established in March 1988, and it started operating in April of that same year. By creating a vibrant secondary market for money market instruments, this money market institution's primary goal is to make it easier to smooth out short-term liquidity imbalances. It has 250 crores of rupees in authorized capital. Discount Finance House of India is referred to as DFHI. It is a specialized money market institution that was founded in April 1988 with the goal of developing the secondary market and supplying liquidity to money market instruments. It carries out many different tasks, including rediscounting and discounting bills, selling and underwriting marketable securities, treasury bills, commercial bills, promissory notes, etc. 7.5 SUMMARY 90  The marketplace for short-term debt instruments is wholesale CU IDOL SELF LEARNING MATERIAL (SLM)

 The market is founded on needs, and it is shaped by the supply and demand of financial resources.  Establish a focal point for central bank action to affect the level of interest rates in the economy generally and liquidity  If the money market is liquid, indirect monetary management techniques like repos and open market operations are more effective. In such a situation, the market reacts to the central bank's policy decisions more quickly and with less distortion.  The informal network of bill brokers that bought bills of exchange and sold them to the Bank of England gave birth to the discount house system, which was formally established in Britain following the 1825 financial crisis.  In 1993–1994 the DFHI's business turnover in the treasury bills and commercial bills segments remained muted. The call money market's favourable conditions discouraged secondary market trades in Treasury Bills. In the money market, treasury bills with terms of 91 days and 364 days are both increasingly popular. 7.6 KEYWORDS  Money market funds- Only businesses and financial organisations that lend and borrow money in sums ranging from $5 million to far over $1 billion per transaction are allowed to participate in the wholesale money market.  Discount and finance – A discount house is a business that focuses on trading, discounting, and negotiating promissory notes or bills of exchange in the financial industry. Its transactions are typically carried out on a big scale and involve transactions involving Treasury bills and bonds as well.  Reserve bank of India – The Reserve Bank of India oversees India's money market. As the central bank, it expands the banking system when there is insufficient liquidity and contracts it in the opposite case.  DFHI– DFHI was established in March 1988, and it started operating in April of that same year. By creating a vibrant secondary market for money market instruments, this money market institution's primary goal is to make it easier to smooth out short-term liquidity imbalances. It has 250 crores of rupees in authorized capital.  Money market accounts have greater minimum balance requirements and withdrawal restrictions than standard savings accounts, but they also pay higher interest rates. 91 CU IDOL SELF LEARNING MATERIAL (SLM)

7.7 LEARNING ACTIVITY 1. Define Money market 2. What is DFHI ___________________________________________________________________________ ___________________________________________________________________________ 7.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Explain money market? 2. What are the characteristics of money market? 3. Advantages of money market? 4. Who uses money market? 5. Explain discount and finance? Long Questions 1. Explain the types of money market instruments? 2. How will you define Discount house system? 3. Name the participants of money market and their functions 4. What is DHFI and how does it work? 5. What is the operation of DFHI? B. Multiple Choice Questions 92 1. Devaluation of money means CU IDOL SELF LEARNING MATERIAL (SLM)

a. Decrease in internal value of money b. Decrease in external value of money c. Both a & b d. None of the above 2. What is minimum limit of commercial paper, an instrument of money market? a. 5Lac b. 10Lac c. 1Lac d. 25Lac 3. The exchange market of India consists of a. Authorized dealers b. RBI c. Overseas banks for some extent d. All of the above 4. Which among the following authority governs the money market in India? a. SEBI b. RBI c. AMIF d. CBI Answers 93 CU IDOL SELF LEARNING MATERIAL (SLM)

1-b, 2-a, 3-d, 4-b 7.9 REFERENCES References books  The Global Money Markets, Wiley Finance, Moorad Choudhry, Frank J. Fabozzi, Steve V. Mann, Wiley & Sons (2002)  Investopedia, \"Money Market.\"  Raphael Zeder. \"The Four Different Types of Money\". quickonomics.com (June 26, 2020).  Archived 2012-02-27 at the Wayback Machine, \"Money Market and Money Market Instruments\" Textbooks  Money Market Funds Enter a World of Risk, September 18, 2008, New York Times  TARGET2's identification of euro money market transactions is the subject of a study.  Raphael Zeder. \"The Four Different Types of Money\". quickonomics.com (June 26, 2020). Retrieved March 16, 2021. Website  https://en.wikipedia.org/wiki/Interbank lending market  https:/www.investopedia.com/terms/d/discount-house.asp 94 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 8 STOCK MARKET STRUCTURE 8.0 Learning Objectives 8.1 Introduction 8.2 Financial Institutions 8.3 Primary & Secondary market 8.3.1 Major financial institutions 8.3.2 Financial institutions contents 8.4 Unauthorized Financial System 8.5 Summary 8.6 Keywords 8.7 Learning Activity 8.8 Unit End Questions 8.9 References 8.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Study the size of the market  Investment banks and their strategies  Standard settlement instruction  The Primary & Secondary Market  Identify Risk Management issues related to market positions 8.1 INTRODUCTION A stock market, also known as an equity market or share market, is the collection of individuals who buy and sell stocks, also known as shares, which represent ownership stakes in corporations. These securities may be listed on a public stock exchange or only traded privately, such as shares of private corporations that are offered to investors through equity 95 CU IDOL SELF LEARNING MATERIAL (SLM)

crowdfunding platforms. An investing strategy is typically present when making an investment. The nation in which the company is headquartered can be used to categorise stocks. Although the equities may also be traded on exchanges in other nations, for instance as American depositary receipts (ADRs) on U.S. stock markets, Nestlé and Novartis are considered to be a component of the Swiss stock market because they are domiciled in Switzerland and listed on the SIX Swiss Exchange. History: The courtiers de change, who worked for the banks, were in charge of overseeing and managing the loans of agricultural communities in 12th-century France. These men could be considered the earliest brokers because they traded with debts as well. The late 13th-century market square in Bruges was the site of a gathering of commodities traders, according to the Italian historian Lodovico Guicciardini. In 1409, the gathering became known as the \"Bruges Bourse,\" formalizing what had previously been an informal gathering. The concept spread fast throughout Flanders and the surrounding nations, and \"Bautzen\" shortly opened in Ghent and Rotterdam. International traders, particularly Italian bankers, who were active in Bruges as early as the 13th century, brought the term \"stock market exchange\" back to their home countries. Initially the Italians (Borsa), it was soon adopted by the French (Bourse), the Germans (börse), the Russians (bira), the Czechs (burza), the Swedes (börs), the Danes, and the Norwegians (brs). The word, which stems from the Latin bursa and is used in most languages to refer to a money bag, coincides with the name of the Van der Beurse family. The concept spread fast throughout Flanders and the surrounding nations, and \"Beurzen\" shortly opened in Ghent and Rotterdam. International traders, particularly Italian bankers, who were active in Bruges as early as the 13th century, brought the term \"stock market exchange\" back to their home countries. Initially the Italians (Borsa), it was soon adopted by the French (Bourse), the Germans (börse), the Russians (bira), the Czechs (burza), the Swedes (börs), the Danes, and the Norwegians (brs). The word, which stems from the Latin bursa and is used in most languages to refer to a money bag, coincides with the name of the Van der Beurse family. Government securities trading was first done by Venetian bankers in the middle of the 13th century. The Venetian government forbade spreading rumours in 1351 in an effort to raise the cost of public money. During the 14th century, bankers also started dealing in government securities in Pisa, Verona, Genoa, and Florence. This was only conceivable due to the fact that these were independent city-states governed by influential citizens rather than a duke. The earliest corporations to offer shares were Italian businesses. In the 16th century, businesses in England and the Low Countries followed. A joint stock company—one whose stock is owned jointly by the shareholders—emerged about this period and played a significant role in the colonization of what Europeans referred to as the \"New World.\" 96 CU IDOL SELF LEARNING MATERIAL (SLM)

The first joint-stock firm to get a fixed capital stock was the Dutch East India Company (established in 1602), which led to ongoing trading in company shares on the Amsterdam Exchange. The Amsterdam market soon saw the emergence of a brisk derivatives trade, including options and repos. Short selling was also invented by Dutch traders; the Dutch government outlawed the practise in 1610. Size of the Market: By the end of 2020, the total market value of all publicly traded securities globally increased from US$2.5 trillion to US$93.7 trillion. There are 60 stock exchanges in the world as of 2016. 16 of these exchanges, which together make up 87% of the world's market capitalisation, have a market value of $1 trillion or more. These 16 exchanges, with the exception of the Australian Securities Exchange, are all located in North America, Europe, or Asia. As of January 2021, the United States of America has the largest stock markets globally, followed by Japan (approximately 7.4%) and China (about 5.4%). Stock Exchange: Stockbrokers and traders can purchase and sell shares (equity stock), bonds, and other assets on a stock exchange, often known as a bourse[note 1]. Stocks from numerous big businesses are traded on a stock exchange. This increases the stock's liquidity and, as a result, its allure to many investors. Additionally, the exchange might guarantee settlement. Additionally, these and other stocks could be traded \"over the counter\" (OTC), i.e. by way of a dealer. In order to draw in foreign investors, some multinational corporations will list their stock on multiple exchanges in other nations. Other securities, such as fixed-interest securities (bonds) or (less frequently) derivatives, which are more likely to be traded OTC, may also be covered by stock exchanges. In the stock market, a stock or security is traded when it is transferred from a seller to a buyer in return for cash. These two parties must agree on a price for this. Equities (stocks or shares) grant an ownership stake in a specific business. Small individual stock investors to larger, international participants in the stock market, such as banks, insurance firms, pension funds, and hedge funds, are all possible. A stock exchange trader may carry out their purchase or sell orders in their place. 97 CU IDOL SELF LEARNING MATERIAL (SLM)

Some exchanges are actual places where transactions are made using the open outcry trading process on a trading floor. Trades are conducted using this method, which involves dealers yelling the bid and offer prices, on several stock exchanges and commodities exchanges. The other kind of stock exchange uses an electronic trading system that is supported by a network of computers. The NASDAQ is an illustration of one of these exchanges. A potential seller and buyer each specify a precise asking price for the same stock in their respective bids. When you buy or sell a stock in the market, you agree to accept either the ask price or the bid price. If there are numerous bidders at the same price, a sale occurs when the bid and ask prices meet on a first-come, first-served basis. A stock exchange's main function is to serve as a marketplace by facilitating the exchange of securities between buyers and sellers. Price discovery is made easier by the exchanges' provision of real-time trading information on the listed securities. People who trade stocks will typically choose to do so on the exchange that receives the most volume because it offers the greatest number of prospective counterparties (buyers for a seller, sellers for a buyer), as well as likely the best price. Alternatives, such as brokers attempting to connect parties to trade outside the exchange, have, however, always existed. Popular third- party marketplaces include Instinet and, later, Island and Archipelago (the latter two have since been acquired by Nasdaq and NYSE, respectively). The fact that this saves exchange commissions is one benefit. But it also has issues like adverse selection. Financial watchdogs have looked at dark pools. 8.2 FINANCIAL INSTUATION A financial institution can offer a wide range of deposit, lending, and investment products to people, businesses, or both in the current financial services industry. While some financial institutions concentrate on giving products and services to the broad public, others are more likely to cater to certain clientele with more niche offers. It's critical to comprehend the distinctions between the various sorts of institutions and the functions they fulfil in order to determine which financial organisation is most suited to meet a certain need. Major 9 Financial institution: 1. Central banks - The financial entities in charge of managing and supervising all other banks are known as central banks. The Federal Reserve Bank, the country's central bank, is in charge of monetary policy as well as the supervision and control of financial institutions. 98 CU IDOL SELF LEARNING MATERIAL (SLM)

Individual consumers do not interact directly with central banks; rather, the Federal Reserve Bank collaborates with sizable financial institutions to offer goods and services to the general public. 2. Retails and commercial banks - Retail banks often provided products to individual customers, whereas commercial banks dealt only with enterprises. Most major banks currently provide both populations with deposit accounts, lending, and minimal financial advising. Checking and savings accounts, certificates of deposit (CDs), personal and mortgage loans, credit cards, and business banking accounts are among the products offered by retail and commercial banks. 3. Internet banks - Internet banks, a more recent addition to the financial institution sector, operate similarly to retail banks. Online platforms rather than physical premises are used by internet banks to provide the same goods and services as traditional banks. Digital banks and neo-banks are the two subcategories of internet banks. Traditional banks that exclusively operate online are known as digital banks. Neobanks, on the other hand, are wholly independent digital banks with no ties to any other banks but their own. 4. Credit unions - A credit union is a particular kind of financial institution that offers conventional banking services. Its members founded, own, and run the credit union. Credit unions used to cater to a certain group of people depending on their field of membership, such as teachers or members of the armed forces. However, they now allow anyone to join and have eased the membership requirements. Since they are not publicly traded, credit unions simply need to produce enough money to cover day-to-day expenses. Because of this, they are able to offer their clients greater rates than traditional banks. 5. Saving and loan association - Savings and loan associations are financial organisations that are jointly held by their clients and account for no more than 20% of all company loans. They offer checking and savings accounts, personal loans, and mortgages to individual customers. Contrary to commercial banks, the majority of these organisations are locally based and privately owned, however some could possibly be listed on a public stock exchange. Better rates on banking products are made possible by the dues that the members pay, which are pooled together. 6. Investment banks - Investment banks are financial organisations that supply services and function as a middleman in complicated transactions, such as mergers or the initial public offering (IPO) of a startup. For large institutional clients like pension funds, they can also serve as brokers or financial advisers. 99 CU IDOL SELF LEARNING MATERIAL (SLM)

Investment banks don't accept deposits; instead, they assist people, organisations, and governments in raising funds by issuing securities. Investment firms, also referred to as mutual fund companies, combine funds from retail and institutional investors to give them access to a wider range of assets. JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup, Bank of America, Credit Suisse, and Deutsche Bank are examples of international investment banks. The latest breed of these businesses, known as robo-advisors, uses mobile technology to provide investment services more affordably and give the general public greater access to investing. 7. Brokerage firms - Brokerage firms aid people and organisations in purchasing and selling securities from potential buyers. Trading in stocks, bonds, mutual funds, exchange-traded funds (ETFs), and some alternative investments is available to brokerage company clients. 8. Insurance companies - Insurance companies are financial organisations that assist individuals in transferring the risk of loss. Insurance companies are used by both individuals and businesses to guard against financial loss caused by unfortunate events including death, disability, accidents, property damage, and other catastrophes. 9. Mortgage companies - Mortgage firms are financial institutions that specialise in creating or financing mortgage loans. While the majority of mortgage lenders focus on serving individual consumers, some only offer lending solutions for commercial real estate. Mortgage firms are solely focused on creating loans, and they look for money from financial institutions to do so. Today, a lot of mortgage providers are online-only or just have a few brick-and-mortar facilities, which allows for cheaper mortgage rates and fees. Financial Institutions Contents: Financial institutions, also known as banking institutions, are commercial organisations that operate as middlemen for many kinds of financial monetary transactions. There are three main categories of financial institutions: Banks, building societies, credit unions, trust companies, and mortgage lending businesses are examples of depository institutions, which take, administer, and lend money. Contractual institutions include insurance firms and pension funds. Investment institutions include underwriters, investment banks, and other such financial organisations that manage investments. 100 CU IDOL SELF LEARNING MATERIAL (SLM)