The trading of shares, credit notes, bonds and debentures is done in the capital market. Capital market is the blood of the economy of a country where trading worth billions of rupees is done every day. Both direct and indirect trading is done. Direct Business is the one, in which, the traders themselves apply to the public holding and sale/purchase shares and debentures in the stock market. This involves a higher risk of profit or loss. While, the indirect business includes mutual funds, where the trader himself does not do the trading, instead fund companies buy and sell in large volumes in the form of their representatives, so that the risk is minimized for traders and returns are assured.
1. Stock Market:
- The place where the listed shares and credit notes of companies are bought and sold is called a Stock Market.
- The functions of clearance and transfer of company shares, credit notes, distribution of clearance, bonus shares clearance, etc. are performed by the stock market.
- Deals are made online in the stock market.
- Only the member brokers of the stock exchange are authorized to execute selling buying transactions.
2. Mutual Fund:
- It means doing business in the capital market by using large fund collected from small investments of investors and distributing the earned profit among them.
- A Mutual Fund invests the fund according to its discretion and tact and buys and sells debentures to earn a profit. Expenses are deducted from profits and the net profit is distributed among all the members of the fund.
