|Capital Market Instruments||Features of the respective instruments|
|Equities||1. Equities are the share in the ownership of the company and are one of the most traded financial instruments on the exchange.|
2. In other words, buying shares/stocks gives you part-ownership in the company.
3. Has better liquidity, which means you can easily sell your shares in the market.
Its inherent volatility offers investors to book short term profits based on stock price fluctuations.
|Derivatives||1. Derivatives are instruments that derive their value from an underlying asset(s) such as currencies, stocks, interest rates, etc.|
2. Derivatives contracts are contracts in which a predefined quantity of stocks, commodities, indices, currencies, bonds, etc. are bought and sold on a specific date at a predetermined rate.
3. The most popular derivatives contracts are futures and options contracts with the latter being a right and not an obligation.
(Debt instruments traded on the exchange can be classified into bonds and debentures.)
|1. Securities issued by companies or the government with an objective to generate funds are known as Debt Instruments.|
2. Interest on these instruments can be earned at specific intervals.
3. The principal amount invested will be repaid at the end of the contract period.
4. They can be both secured as well as unsecured.
5. Issued to raise funds for day-to-day operations, business expansion, acquisitions, paying off debts, or more.
6. Yields lower returns as compared to most other instruments like Equity, Gold, and Real Estate over the long run.
|Mutual Funds||1. A fund created by contribution from a number of investors is known as a Mutual Fund.|
2. The money is then invested in securities like equities, bonds, money market instruments, and other securities available in the market.
3. It offers investors an opportunity to invest in diversified and professionally managed securities at a relatively low cost.
4. You can choose to get these funds managed by expert and professional portfolio managers who will do meticulous research before investing your money.
|Exchange Traded Funds||1. An exchange-traded fund (ETF) is a type of pooled investment security that operates much like a mutual fund.|
2. Typically, ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can.
3.ETFs have a comparatively lower expense ratio. (Expense ratio is the fee charged by the investment company to manage the funds of investors).
4. Investors prefer investing in ETFS as these are registered with the Securities and Exchange Board of India (SEBI).
5. For example Tata Nifty ETFtracks underlying asset called Nifty 50.