Bangladesh Institute of
Capital Market
Investment in Capital Market
Gourav Roy
Lecturer
Bangladesh Institute of Capital market
Topics To be Covered
Financial System Overview
Money Market and Capital Market
Instruments
Why Investment in Capital Market?
What is Investment ?
Difference between Investment and Savings?
Why Invest?
Sacrificing consumption for future
Risk
inflation
Financial
Market
Importance of Financial market
Time Value of Money : For example, if you save $1,000, but there are no financial
markets, then you can earn no return on this-might as well put the money under
your mattress.
Return on Investment (ROI) : For example, if a carpenter could use that money to buy a
new saw (increasing his/her productivity) , then she ’d be willing to pay you some
interest for the use of the funds.
Efficient allocation of capital: Allowing funds to move from people who lack
productive investment opportunities to people who have them.
Financial Market Overview
Ministry of Finance
Exchange
Depository
CCP
Broker, MB.
AMC, FM,
CRA, DP,
Trustee Etc.
Company
Govt.
Other Issuer
BSEC
IDRA
Capital
Market
Insurance
Equity, Bond,
Debenture,
ABS, ETF
MF, VC, PE,
IF,SUKUK
Derivative,
Structured Product
MRA
BB
Micro
Money
Market
Credit
Insurance
Company
MCI
Bank
Current Savings
STD
Insurance
Policies
Microcredit
Products
NBFI
FDR, DPS
Other Products
Money Market Versus Capital Market
Money Market
Capital Market
• Market where long term securities are
issued and traded
• Market where short term borrowings-lending
takes place
• One year or more may even be indefinite
• Up to one year
• Comparatively lower liquidity
• High liquidity
• High risk
• Low risk
• High ROI
• Comparatively lower
• Shares, bonds, debentures, etc.
• Treasury bills, commercial papers, municipal
notes, etc.
Why Investment in Capital Market ?
Money Market
Capital Market
Annualized equity return
(2001-2020):
Bank deposits:
Mutual fund annualized
equity return (2001-2020):
Sanchaypatra:
5% - 6%
15%
9%- 11%
6%
Inflation:
8.91%
Types of Capital Market Instruments
Common stock/preferred Stock
Mutual Fund
Bond/Debentures/ Green bond/ Sukuk
Treasury securities
Indexed fund/Exchange traded fund
Intermediaries in Capital Market
Stock brokers/ TREC holders ( 280)
Asset Management Companies ( 49 )
Merchant banks (63)
Custodian (8+15)
Trustee ( 8 for MFs and 84 for debt securities)
Credit Rating Companies (9)