II unit finance (1) - II UNIT Sources of Finance CAPITAL...

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II UNIT Sources of Finance
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CAPITAL AND MONEY MARKET
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CAPITAL MARKET A Market where long term funds are raised. Funds are used for more than one year. Funds raised in this market is used for investment in fixed assets. (Land & Buildings,Furniture,Plant,Machiner y etc.) Purpose of Purchase of Fixed Assets Instruments used in this market to raise funds are Shares, Debentures,Long term loans, Public deposits. MONEY MARKET A Market where short term funds are raised. Funds are used for less than one year. Funds raised in this market is used for investment in Current assets. (Land &Buildings,Furniture,Plant,Machine ry etc.) Purpose of working capital requirements. Instruments used in this market to raise funds are Treasurybills,Certificate of Deposits,commercial bils, commercial paper,call money,inter
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TYPES OF SOURCES OF FUNDS Based on the period Based on Ownership Based on Sources of Generation Based on Mode of Finance
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BASED ON THE PERIOD Long-term sources Tenure of raising finance is more than one year Equity Shares Preference Shares Debenture Long-term Loans Fixed Deposits Long-term source of finance needs to meet the capital expenditure of the firms such as purchase of fixed assets, land and buildings, etc.
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BASED ON THE PERIOD Short term sources Tenure of raising the funds is less than one year. Short-term source of finance needs to meet the operational expenditure of the business concern or to meet the working capital requirements of a business concern. Bank Credit Customer Advances Trade Credit Public Deposits Money Market Instruments
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