Date Posted: 6/19/2014 3:24:01 AM
Posted By: wanjala willies Membership Level: Silver Total Points: 626
This is long term funds for at least more than one year. They are of two categories, security market and non security market. The latter refers to a market for long term securities such as bonds and shares as well as government treasury bills. While the former refers to long term loans such as leasing, Mortgage finance and long term bonds. Capital market was established in Kenya in the year 1990 by an act of parliament. This was basically to assist in creating conducive environment for general growth and development of markets in Kenya. Capital market plays a very vital role in our Kenyan economy in many varied ways.The capital market authority helps in removal of bottle neck in the economy through provision of adequate information and creation of public awareness particularly to investors in long-term assets securities.The capital market authority is ideal too in establishing an environment that encourages local companies to going public .this implies that the local companies will secure a chance of being listed in foreign stock market. This will in turn boost its efficiency in operation as potential investors will find relevant information through financial statement analysis to establish business viability in long run. This is because; it’s a mandate that all listed companies disclose their financial reports for every fiscal year.It operates a compensation fund scheme to protect investors from financial loses should brokers fail to meet their financial obligations.The capital market authority is also ideal in guarding against manipulation of share prices and insider trading. Provides adequate information under which investors will not suffer from brokerage acts. The latter is achieved by implementation of government programs with regard to capital market authority.It also acts as a watch dog for entire capital market authority market by continuous market review structures and correcting relevant errors identified.It also serves as an efficient bridge between public and private investors. Since private investors are not legally required to disclose their financial documents to the public, capital market authority has a direct link to this companies under which private from the general public can easily access the information thus acting as a link between the former and the latter.
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