In India there are thirteen recognized stock exchanges. These are situated in Mumbai, Kolkata, Chennai, Delhi, Ahmedbad, Banglore, Hyderabad, Kanpur, Cochin, Pune, Jaipur, and Ludhiana. The Mumbai stock exchange has the largest number of companies listed with it.
Listed securities are “cleared” and “non-cleared”. To get listed certain rules are to be followed. These are :
1) Memorandum of association, which should conform to the requirements of the market.
2) Public subscription should be offered through prospects
3) Prospectus should conform to the rules
4) Allotment of shares must be fair and unconditional
5) Listing agreement must be executed
Industrial Securities :
The most important component of the industrial security comprises of the New Issue and the Stock Exchange Market. These are the physical or tangible asset through which the market functions. The corporate sector raises their capital through different sectors like :
1.Equity Share, Ordinary Shares or Common Stock,
2.Preference Share, Debentures and Bonds.
A. Equity Share, Ordinary Shares or Common Stock
B. Equity shares as an investment option
C. Liability
D. Profit Potentiality
E. Purchasing Power Risk
F. Preference Share
Features of Preferred Shares :
Dividend : A preference shareholder has priority over equity shareholders in the payment of dividends but the rate is fixed. In India the Controller of Capital Issues usually fixes the rate of dividend of preference shares. Preference shareholders usually get cumulative rate of dividends so that if in one year, the company does not pay a dividend, it pays the same in the next year. The dividends also have a priority over equity shares.
Types of Preference Shares :
1.Cumulative and Non Cumulative Preference Shares
2.Redeemable and Irredeemable Preference Shares
3.Participating and Non participating Preference Share
a) Debentures, b) Bonds, c) Corporate Bonds or Debentures
Advantages of Investing in Bonds and Debentures :
1.Minimizing Risk
2.Tax Savings
Analyzing before investing :
Corporate bonds must be carefully analyzed before investing in them. The consideration before an investor should be,
a) To find out the quality of the Bond
b) Credit Position of the issuing company,
c) Regular Payment of Interest and
d) Risk and Return on Bonds
i.Quality of Bonds
ii.Position of Issuing Firm
iii.Repayment Facility of Principle
iv.Regular Payment of Interest
v.Risks and Return on Bonds