Types of Capital - government securities etc All such investments are together known as portfolio investments Share capital of companies or

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Types of Capital: Capital is a functional concept and is not restricted to a specific set of goods. Therefore a variety of goods and services assumes the role of capital. i) In the first place, there is physical capital and financial capital . All material agents of production such as plants and machinery, tools and equipment, power or energy resources , transport vehicles, etc. are physical forms of capital. When all economic activities are widely monetized there is an equivalent stream of financial or monetary capital . This takes a variety of forms. Financial investments can be made in time deposits of commercial banks or through purchase of bonds, shares, debentures (loan certificates), purchase of
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Unformatted text preview: government securities, etc. All such investments are together known as portfolio investments . Share capital of companies or corporations is called equity investment . Households undertake such investment with a view to earn attractive interest or dividend income. Paper investment by itself must not be regarded as the final generation of capital goods. It is merely a step in that direction. Complete paper investment may not necessarily get converted into physical capital. Still it is an important part of the process of capital formation....
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This note was uploaded on 11/26/2011 for the course ECON MICRO ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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