Page 58 - DCOM504_SECURITY_ANALYSIS_AND_PORTFOLIO_MANAGEMENT

Unit 1: Introduction to Capital Market

Notes
7. The risk associated with each investment changes with time, and must be monitored
carefully.
The take home from all of this is that the Rubicon must be crossed. And this is not a Catch-
22 situation. Yes you must invest to protect your savings from inflation but that need not
necessarily place your financial future at jeopardy. There are low risk investments that
exist in the market place. You can structure your investments based on your appetite for
risk.
By the time you get to this point in the write-up, you may be feeling just a wee bit nervous
about your savings. Nay, Investments. Don’t. At the end of the day, investing your Savings
is like falling in love. It can be risky and it can hurt, but that doesn’t stop us from falling in
love does it? For the heady and glorious experience.... The old adage, “its better to have
loved and lost than never to have loved at all” may assume a new meaning. Investing can
be a rewarding experience just as being in love is.
Question:
Analyze the difference between investment and saving.

1.6 Summary

When an existing listed company either makes a fresh issue of securities to the public or
makes an offer for sale of securities to the public for the first time, through an offer
document, such issues are called as 'Follow on Public Offering'.
Such public issue of securities or offer for sale to public is required to satisfy the stock
exchange listing obligations along with SEBI guidelines.
When a listed company proposes to issue securities to its existing shareholders, whose
names appear in the register of members on the record date, in the proportion to their
existing holding, through an offer document, such issues are called 'Rights Issue'.
This mode of raising capital is best suited when the dilution of controlling interest is not
intended.
A preferential issue is an issue of equity shares or of convertible securities by listed
companies to a select group of persons, which is neither a rights issue nor a public issue.
A company that makes any public or rights issue or an offer for sale can issue shares only
in the dematerialised form.
A company shall not make a public or rights issue of shares unless all the existing partly
paid shares have been fully paid-up or forfeited.

A company that is making public issue of securities shall make an application to the stock
exchange for listing of those shares.

The new issue market encompasses all institutions dealing in fresh claims.
The forms in which these claims are created are equity shares, preference shares, debentures,
rights issues, deposits etc.
All financial institutions that contribute, underwrite and directly subscribe to the securities
are part of new issue markets.
The industrial securities markets in India consist of new issue markets and stock exchanges.

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