ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Stock is a capital market instrument issued by companies to raise capital. It is also known as equity share. Investment in company stocks gives you ownership and voting rights in the company. The partial ownership in the company extends until you sell the shares in the secondary market or the company liquidates.

Detailed explanation-2: -The equity capital market is a subset of the broader capital market, where financial institutions and companies interact to trade financial instruments and raise capital for companies. Equity capital markets are riskier than debt markets and, thus, also provide potentially higher returns.

Detailed explanation-3: -Common examples of financial instruments include stocks, exchange-traded funds (ETFs), mutual funds, real estate investment trusts (REITs), bonds, derivatives contracts (such as options, futures, and swaps), checks, certificates of deposit (CDs), bank deposits, and loans.

Detailed explanation-4: -The three main participants of the capital markets are savers (also known as investors), borrowers, and stockholders. The term capital market includes the stock market, bond market, and related markets.

Detailed explanation-5: -2. Equity-Based Financial Instruments. Equity-based financial instruments are categorized as mechanisms that serve as legal ownership of an entity. Examples include common stock, convertible debentures, preferred stock, and transferable subscription rights.