CHAPTER -7 CAPITAL MARKET THEORY - Shodhganga.
The purpose of this assignment is to allow the student an opportunity to explain what it means to have an efficient capital market. Students will gain an understanding of the different levels of market efficiency and how behavioral finance can inhibit reaching market transparency. Assignment Steps Explain in 500 words what it means to have efficient capital market, including: Describe the.
The return on a stock market is the sum of the average capital gain and the average dividend yield. In the short term, a stock market can provide a negative rather than a positive return if the effect of falling share prices outweighs the dividend yield.
As Bangladesh capital market is still quite small compared to other regional market and to the size of its economy (CSE, 2006) despite its existence for a long time, this paper applies a framework for analyzing the significance of capital market for economic growth and development of Bangladesh, identifying its growth potentials through exploration.
An efficient capital market can provide a mechanism for raising capital and also by protecting investors in corporate securities4. The capital market has two interdependent and inseparable segments, the primary market and stock (s econdary market). 3.1 Primary Market The primary market provides the channel for sale of new securities.
The capital market is the market for securities, where Companies and governments can raise long-term funds. It is a market in which money is lent for periods longer than a year.
This classification is done on the basis of the nature of the instrument brought in the market.However on the basis of the types of institutions involved in capital market, it can be classified into various categories such as the Government Securities market or Gilt-edged market, Industrial Securities market, Development Financial Institutions (DFIs) and Financial intermediaries.
Capital assets pricing model is the model tested under Capital Market Theory. This model helps the investor build his portfolio of assets through the use of Beta. Although it is theoretical, the practical application of this is the use of market Beta and individual scrip Betas to select the scrips suitable to the preferences of investors, so that the returns are maximised for the given level.