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Financial Market: by DR Sheeba Kapil

Financial markets act as channels to efficiently allocate savings to investment opportunities. They have two major components: the money market and the capital market. The money market deals in short-term funds with maturities up to one year through liquid instruments and facilitates central bank intervention to influence liquidity. The capital market raises intermediate and long-term funds for businesses, governments, and individuals through new security issuances in the primary market and trading of existing securities in the secondary market.

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Rakesh Arora
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350 views9 pages

Financial Market: by DR Sheeba Kapil

Financial markets act as channels to efficiently allocate savings to investment opportunities. They have two major components: the money market and the capital market. The money market deals in short-term funds with maturities up to one year through liquid instruments and facilitates central bank intervention to influence liquidity. The capital market raises intermediate and long-term funds for businesses, governments, and individuals through new security issuances in the primary market and trading of existing securities in the secondary market.

Uploaded by

Rakesh Arora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Financial Market

By Dr Sheeba kapil

Financial markets
Act as medium/ channels for allocation of savings to
investment.
Efficient transfer of money from those having idle
resources to others who have a pressing need for them
The financial markets have two major components:
Money market
Capital market.

Money Market
market for short-term funds with maturity ranging from
overnight to one year
financial instruments are liquid :very close substitutes of money.
Money Market transactions are done over the counter i.e. done
directly between two parties.
The money market performs three broad functions.
It provides an equilibrating mechanism for demand and supply
of short-term funds.
It provides an avenue for central bank intervention in
influencing both quantity and cost of liquidity in the financial
system, thereby transmitting monetary policy impulses to the
real economy.

MONEY MARKET : MAIN INSTRUMENTS, PARTICIPANTS

Capital Market
The Capital Market comprises
the complex of institutions and mechanisms through which
intermediate term funds and long-term funds are pooled
and made available to business, government and
individuals.
It is the market for securities where either companies or the
government can raise long term funds.
The capital market actually consists of two markets.
1.primary market -where new issues are distributed to
investors
2.secondary market - where existing securities are traded.

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