Magistratura məRKƏZİ Əlyazması hüququnda

SUMMARY

The securities market being an integral part of the Capital market is known as a market for long-term funds. It facilitates an efficient transfer of resources from savers to investors and becomes conduits for channelling investment funds from investors to borrowers.

The basic need of the securities market is to meet at least two basic requirements it should support industrialisation through savings mobilisation, investment fund allocation and maturity transformation and it should be safe and efficient in discharging the aforesaid function. It has two segments, namely, securities segments and non-securities segments.

The securities segment is concerned with the process a firm distributes its securities to the public in the primary market and the securities are then traded in the secondary markets commonly known as stock exchanges. Financial intermediaries, such as investment banks, asset management companies, underwriters, broker- members etc are involved in the process. Securities segments of capital market have two important roles to play ie, information production and monitoring. The prospective allocative role of stock price arises because the markets have information that manager does not have. Current stock prices are indicative of the potential investment decision making to profitable industrial sectors to which resources must be allocated. If the stock price goes down manager is less like ly to invest while he/she is more likely to invest if the price goes up. It shows how stock

prices influence the equity fund allocation decisions.