Assignment on Assignment on Capital Market Financing

Assignment on “Capital Market Financing”
Submitted To:
Mr. Md. Mahfujur Rahman
Assistant Professor
School of Business
(BBA Program)
Submitted By:
Md. Rakib Mia
ID: 170202087
Section: B
Year: 4th year 2nd semester

Executive summary
Investing in long-term debt is the primary function of the capital markets. A capital market is a
place where buyers and sellers trade financial instruments such as bonds and other such
instruments. People and businesses trade financial securities in this market. Public and private
sector organizations/institutions also frequently sell securities on the capital markets to raise
money. There are primary and secondary marketplaces in this type of market. In the capital
market, corporations and the government can raise long-term funds through the sale of securities.
It's a market where people can borrow money for longer periods of time than a year. The stock
and bond markets are part of the capital market. The word "capital market" refers to a network of
interconnected marketplaces in which capital in financial form is lent or borrowed for short,
medium, and long-term periods, as well as for undetermined periods in the case of equity.

Table of Contents
Executive summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
Capital market of Bangladesh:.....................................................................................................................3
Types of Capital Market:.............................................................................................................................4
Operation of Primary & Secondary Market:................................................................................................4
IPO..............................................................................................................................................................6
Preparing an IPO.....................................................................................................................................6
ROLE OF CAPITAL MARKET.................................................................................................................8
Market System.............................................................................................................................................8
The Instruments of Capital Market............................................................................................................10
1. Share..................................................................................................................................................11
2. Debenture..........................................................................................................................................11
3. Bond..................................................................................................................................................11
Stock Market in Bangladesh......................................................................................................................14
Dhaka Stock Exchange (DSE)...................................................................................................................14
Nature of Dhaka Stock Exchange......................................................................................................14
Chittagong Stock Exchange (CSE)............................................................................................................15
SWOT Analysis of Stock Market..............................................................................................................17
Circuit Breaker..........................................................................................................................................18
Category of the companies........................................................................................................................19
Settlement cycle........................................................................................................................................19
T+2 settlements cycle............................................................................................................................20
T+3 settlements cycle............................................................................................................................20
Margin Loan..............................................................................................................................................20
Problems of Structure of Capital Market in Bangladesh............................................................................20
Math Portion..............................................................................................................................................21
Conclusion:................................................................................................................................................24
References:................................................................................................................................................25

Introduction
It is possible to describe the capital market as the engine that drives capital raising and, in turn,
the speed of industrialization and privatization. To put it another way, the capital market refers to
the country's stock exchanges. A market for long-term investment funds exists here.
Bangladesh's capital market is the third-largest in South Asia, while being one of the continents
smallest. In addition to the Dhaka Stock Market (DSE) and Chittagong Stock Exchange (CSE),
which both operate fully computerized stock exchanges, the country also has an over-the-counter
exchange run by CSE. The Securities and Exchange Commission (SEC) is also a part of the
regulatory structure because it implements and oversees rules and regulations to operate and
develop the capital market. For the settlement of CSE and DSE transactions in dematerialized
securities, Bangladesh's Central Depository Bangladesh Limited (CDBL) serves as Bangladesh's
only Central Depository. Many people are involved in the financial markets. All the major
financial institutions, including commercial banks, savings and loan associations, credit unions
and mutual savings banks as well as merchant bankers, discount houses and venture capital
companies, are included in this group. They also include investment clubs, pension funds and
stock exchanges, as well as underwriters, portfolio-managers and insurance companies.
Capital market of Bangladesh:
As part of the global financial system, Bangladesh's capital market is considered a "emerging"
market. Objectives: To create in Bangladesh a capital that is well-balanced, secure, and resilient
As the third biggest in South Asia, Bangladesh has a relatively tiny capital market. Dhaka Stock
Exchange (DSE) and Chittagong Stock Exchange are the two fully automated stock exchanges in
Bangladesh (CSE). BSEC was founded in 1993 to supervise the activity of the exchanges, ensure
proper issuance of securities and compliance with regulations, and protect the interests of
securities investors after many years of operations.

Types of Capital Market:
 The Primary Market
The primary market deals with newly issued securities and is responsible for generating
new long-term capital.
 The secondary market
The secondary market handles the trading of previously-issued securities and must
remain highly liquid in nature because most of the securities are sold by investors.
Operation of Primary & Secondary Market:
Investors Share purchase:
Investor shares: Mutual fund shares purchased by individual investors as opposed to
institutional shareholders.
Stock Market: Participants in the stock market range from small individual stock investors to
large hedge. Provide a bid and ask price at which they will always purchase or sell their stock.
A share of stock is the smallest unit of ownership in a company. Investors buy preferred stock
for its current income from dividends, so look for companies that make big profits to use.
Investment Bangladesh stock market (CSE and DSE): Investment in primary and secondary
market share is eligible for investment allowance. The steps necessary in order to buy/sell share
in Bangladesh stock.
Primary Market: Underwriting groups are responsible for facilitating primary markets, which
are essentially two separate markets inside the stock market.
What you learn about primary and secondary markets will help you better grasp how equities
move.. There would be a lot more difficulty in capitalizing on the stock market without them.
Companies, governments, and other public sector organizations can raise money by selling new
stock or bonds on the primary market..
Markets for primary and second-hand securities exist. Securities such as stocks and bonds are
first placed with investors directly.

When shares are generated and sold by the issuing company in order to benefit financially by
raising capital, this is referred to as the "primary market."
The primary market is the section of the capital markets that deals with the selling of a new stock
issue, which is known as an IPO in the industry.
Government and public sector organizations can raise money by issuing new instruments, such
as stocks or bonds. In most cases, a group of stockbrokers will take care of this for you.
Features of Primary Markets: New long-term equity capital can be found here. The initial sale
of securities occurs on the primary market. In this way, the fresh issue market is also referred to
as (NIM). When the corporation issues the securities directly to investors, it is known as a
primary issue. After receiving the funds, the corporation will issue the investors with fresh
certificates of ownership. Companies use primary concerns to start new businesses or to
modernize their present businesses.
The primary market is essential to the economy's ability to generate capital. Initial Public
Offering (IPO): Rights issue (for existing companies) and preferred issue (for new enterprises).
The principal market in the stock market is the initial public offering (IPO).
In the secondary market, everyone who buys or sells shares that have already been issued is
involved. First-time investor purchases of an initial public offering (IPO) are considered primary
market trades.
Secondary Market: The financial market where previously issued securities and financial
instruments, such as stock, bonds, options, and features, are bought and traded is also known as
the "aftermarket.".
Any used products or assets, or an alternate application for an existing product or asset, where
the second market is the customer base is also known as the secondary market. When it comes to
food production and livestock feed, maize has traditionally been the primary source of the latter.
Second or third markets have emerged, however, for use in the manufacturing of ethanol Loans
sold to investors like Fannie Mae and Freddie Mac by a mortgage bank are referred to as
"secondary market" loans.