Financial Markets Management Class -10 Chapter -1 Notes

Hello guys, these are the notes of Chapter 1 (Investment) of FMM, Class 10 . 

Investment

• When we use savings in order to get return on it in future. This is called investment.

Why should one invest?

1. To earn return on resources
2. To generate specified sum of money for future
3. For uncertain future

Inflation

• Inflation is the rate at which the cost of living increases.

Handwritten Notes for class 10 FMM 

https://imojo.in/yhiA29

When to start investing?

Invest early , regularly and for long term

Guys if you want to have a detailed explanation of chapter 1 , you can also refer my channel on YouTube (Be the topper). 

What care should one take while investing?

1. Obtain written document.
2. Read and understand them.
3. Verify the legality of the investment.
4. Find out costs and benefit.
5. Assess risk-return profile.
6. Know the liquidity.
7. Compare the details with earlier investment.
8. Deal only through an authorised intermediary.

Interest 

Interest - Amount charged to the borrower for the privilege of using the lender's money.

What factors determine interest rates?

1. Demand for money.
2. Level of government borrowings.
3. Supply of money.
4. Inflation rate.
5. RBI and government policies.

Various options available for investment ?

Physical assets - real estate, gold , commodities etc.

Financial assets - FD, post offices, insurance, provident, pension fund

For Sample paper of class 10 fmm ,click here 👇👇👇

               Question Bank/Sample paper of class -10 FMM

Short - term financial options

Saving bank account

First banking product people use

Offers low interest (4-5%)

Money market or liquid funds

Specialised form of mutual funds.

Invest in short term fixed income instrument.

Provide easy liquidity.

Give better returns than saving accounts

Fixed deposit with banks

Also referred - Term deposit

Minimum investment period - 30 days 

For Low risk appetite investor

Long term financial options

Post office savings

Low risk saving instrument

Can be availed through any post office.

Interest rate -8% per annum paid monthly 

Minimum amount - ₹1000

Maximum amount -₹3,00,000

Maturity period - 6 years

10% bonus on completion 

But 5% deduction if withdrawn prematurely

Public provident fund

Long term saving instrument

Maturity - 15 years

Interest - 8% per annum compounded annually

can be opened through a nationalized bank.

Tax benefits can be availed.

Company fixed deposit

Borrowing by company for short term to medium term at a fixed rate of interest.

Interest varies between 6 -9% 

Interest received after deduction of tax. 

Bonds

Debt instrument

A promise to repay the principal along with fixed rate of interest on a specified date (maturity date).

Purpose - raising capital

Issued by central or state government. 

Mutual funds

Operated by an investment company.

Raise money from public and invest in group of assets.

Substitute for doors who lack resources, time and  knowledge about investing .

NAV - Value of all shares - expenses / number of units issued.

Stock Exchange

Body of individuals under The Securities Contract Regulation Act ,1956 [SCRA] constituted for the purpose of assisting, regulating the business of buying, selling or dealing in securities.

Equity

Shares

The holders of equity are members of the company and have voting rights.

Debt Instrument

Contract where by one party lends money to another on pre-determined terms ( Rate and Period of interest, repayment of principal amount ) 

Two types of debts

Bonds - issued by central or state government

Debentures - issued by private corporate sector.

Derivative 

Product whose value is derived from the value of one or more basic variables is called underlying (Shares, stocks, debentures ,bonds etc.)

Index 

It is a basket of securities and the average price movement of the basket of securities indicates the index movement , whether upwards or downwards.Nifty is the index of National Stock Exchange

Depository

Like a bank where in the deposits are securities (shares and debentures bond government securities units etc.), in electronic form.

Dematerialization

process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form.

You can read these comprehensive notes as well as write these in your notebook. 

Thank you guys. 

If you have any doubt regarding FMM, Please ask in the comment section. I will be very happy to solve your doubts. 

You can also check Financial Markets Management class 10 series on my YouTube channel.