The Indian capital market comprises the sum total of all the buyers and sellers – both individuals and institutions – who trade in various kinds of certificates or financial instruments that carry a certain monetary value. Such financial instruments are broadly classified into equities and debt securities. Equity: This is the value of shares issued by a company to an individual or institution and indicative of her/his ownership in the company. A portion of the company’s profits is distributed annually to shareholders in the form of dividend. Where shareholders sell their equity at a price higher than their purchase price, they also benefit in terms of capital gains, which is taxable. Equities do not return any fixed interest. Debt-based security: This takes the form of government bonds, municipal bond, corporate bonds, certificate of deposit, debenture, promissory note, or preferred stocks whose holders have a right to fixed dividends. The issuer of a debt instrument promise...