Compendium admissions 2023-25
Exchange Traded Funds (ETFs)
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- Commodities
- Structure of Securities Market
- Public issue
| Exchange Traded Funds (ETFs) Exchange Traded Fund (ETF) is an investment vehicle that invests funds pooled by investors to track an index, a commodity or a basket of assets. It is similar to an index fund in the sense that its portfolio reflects the index it tracks. But, unlike an index fund, the units of the ETF are listed and traded in demat form on a stock exchange and their price changes continuously to reflect changes in the index or commodity prices. Commodities Commodities are basic materials or goods that are largely homogenous in nature. These goods are interchangeable with other goods of the same type. Thus, a bar of gold is a commodity, while a jewellery made of gold is not a commodity. This is because an investor would be indifferent to different bars of gold as long as their quantity and quality remain same. However, in the case of jewels, the buyer may prefer one design over another even though their weight and quality maybe the same. Commodities maybe hard or soft. Hard commodities are essentially natural resources that are mined or extracted. This includes all types of metals and crude oil. Soft commodities on the other hand refer to commodities that are grown i.e. agricultural products. Soft commodities include grains and pulses. Commodities are largely traded goods that are meant for use in production of goods or for consumption. Since inflation and prices of commodities are directly related, investing in commodity can help protect real 7 value of investment. However, most of the commodities involve huge storage cost and are thus not suitable investments. Having said that, there are certain avenues available to invest in commodities. Structure of Securities Market The market in which securities are issued, purchased by investors, and subsequently transferred among investors is called the securities market. The securities market has two interdependent and inseparable segments Primary Market The primary market, also called the new issue market, is where issuers raise capital by issuing securities to investors. Fresh securities are issued in this market. Secondary Market The secondary market facilitates trades in already-issued securities, thereby enabling investors to exit from an investment or new investors to buy the already existing securities. The primary market facilitates creation of financial assets, and the secondary market facilitates their marketability/tradability which makes these two segments of Financial Markets - interdependent and inseparable. Public issue Securities are issued to the members of the public, and anyone eligible to invest can participate in the issue. This is primarily a retail issue of securities. Download 4.08 Mb. Share with your friends:
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