The document is about financial markets. It provides definitions of financial markets and money markets. It discusses the types of financial markets including over-the-counter markets, bond markets, money markets, derivatives markets, and foreign exchange markets. It also outlines the key functions of financial markets and classifications of markets by nature of claim, maturity of claim, timing of delivery, and organizational structure. The document concludes by comparing and contrasting money markets and capital markets.
The document is about financial markets. It provides definitions of financial markets and money markets. It discusses the types of financial markets including over-the-counter markets, bond markets, money markets, derivatives markets, and foreign exchange markets. It also outlines the key functions of financial markets and classifications of markets by nature of claim, maturity of claim, timing of delivery, and organizational structure. The document concludes by comparing and contrasting money markets and capital markets.
The document is about financial markets. It provides definitions of financial markets and money markets. It discusses the types of financial markets including over-the-counter markets, bond markets, money markets, derivatives markets, and foreign exchange markets. It also outlines the key functions of financial markets and classifications of markets by nature of claim, maturity of claim, timing of delivery, and organizational structure. The document concludes by comparing and contrasting money markets and capital markets.
The document is about financial markets. It provides definitions of financial markets and money markets. It discusses the types of financial markets including over-the-counter markets, bond markets, money markets, derivatives markets, and foreign exchange markets. It also outlines the key functions of financial markets and classifications of markets by nature of claim, maturity of claim, timing of delivery, and organizational structure. The document concludes by comparing and contrasting money markets and capital markets.
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ISABELLA THOBURN COLLEGE
B.COM SEMESTER II SUBJECT- FINANCIAL LITERACY AND BANKING TOPIC– FINANCIAL MARKET
SUBMITTED TO : SUBMITTED BY : Ms AFREEN KHAN Kausar Zia Siddiqui Roll no- 218235 ACKNOWLEDGEMENT I would like to express my special thanks of gratitude to my teacher Ms Afreen Khan who gave me the golden opportunity to make my assignment in Financial Literacy and Banking on the topic Financial Market who also helped me in completing my assignment. I came to know about so many new things. I would also like to thanks my parents and friends who also supported me in completing my assignment in the limited time frame.
Thank You Kausar Zia Siddiqui INDEX What is a financial market? Meaning of financial market Types of financial market Functions of financial market Classification of financial market WHAT IS A FINANCIAL MARKET ? A financial market is a word that describes a marketplace where bonds, equity, securities, currencies are traded. Few financial markets do a security business of trillions of dollars daily, and some are small-scale with less activity. These are markets where businesses grow their cash, companies decrease risks, and investors make more cash MEANING OF FINANCIAL MARKET A Financial Market is referred to space, where selling and buying of financial assets and securities take place. It allocates limited resources in the nation’s economy. It serves as an agent between the investors and collector by mobilising capital between them. In a financial market, the stock market allows investors to purchase and trade publicly companies share. The issue of new stocks are first offered in the primary stock market, and stock securities trading happens in the secondary market. TYPES OF FINANCIAL MARKET Over the Counter (OTC) Market – They manage public stock exchange, which is not listed on the NASDAQ, American Stock Exchange, and New York Stock Exchange. The OTC market dealing with companies are usually small companies that can be traded in cheap and has less regulation. Bond Market – A financial market is a place where investors loan money on bond as security for a set if time at a predefined rate of interest. Bonds are issued by corporations, states, municipalities, and federal governments across the world. Money Markets – They trade high liquid and short maturities, and lending of securities that matures in less than a year. Derivatives Market –They trades securities that determine its value from its primary asset. The derivative contract value is regulated by the market price of the primary item — the derivatives market securities, including futures, options, contracts-for-difference, forward contracts, and swaps. Forex Market – It is a financial market where investors trade in currencies. In the entire world, this is the most liquid financial market. FUNCTIONS Mentioned below are the important functions of the financial market. It mobilises savings by trading it in the most productive methods. It assists in deciding the securities price by interaction with the investors and depending on the demand and supply in the market. It gives liquidity to bartered assets. Less time-consuming and cost-effective as parties don’t have to spend extra time and money to find potential clients to deal with securities. It also decreases cost by giving valuable information about the securities traded in the financial market CLASSIFICATION OF MARKET The financial market can be classified into three different forms. 1. By Nature of Claim Debt Market – It is a market where fixed bonds and debentures or bonds are exchanged between investors. Equity Market – It is a place for investors to deal with equity. 2. By Maturity of Claim Money Market – It deals with monetary assets and short-term funds such as a certificate of deposits, treasury bills, and commercial paper, etc. which mature within twelve months. Capital Market – It trades medium and long term financial assets. 3. By Timing of Delivery Cash Market – It is a market place where trade is completed in real-time. Futures Market – Here, the delivery or compensation of products are taken in the future specified date. 4 .By Organizational Structure Exchange-Traded Market – It has a centralised system with a patterned procedure. Over-the-Counter Market – It has a decentralised organisation with customised procedures MONEY MARKET
The money market is a good place for
individuals, banks, other companies, and governments to park cash for a short period of time, usually one year or less. It exists so that businesses and governments that need cash to operate can get it quickly at a reasonable cost, and so that businesses that have more cash than they need can put it to use. CAPITAL MARKET The capital market is where stocks and bonds are traded. Its movements from hour to hour are constantly monitored and analyzed for clues as to the health of the economy at large, the status of every industry in it, and the consensus for the short-term future. The overriding goal of the companies institutions that enter into the capital markets is to raise money for their long-term purposes, which usually come down to expanding their businesses and increasing their revenues. They do this by issuing stock shares and by selling corporate bonds. Money Market Vs. Capital Market: An Overview
The money market and the capital market are not single institutions but two broad components of the global financial system. The money market is the trade in short- term debt. It is a constant flow of cash between governments, corporations, banks, and financial institutions, borrowing and lending for a term as short as overnight and no longer than a year. The capital market encompasses the trade in both stocks and bonds. These are long-term assets bought by financial institutions, professional brokers, and individual investors. Together, the money market and the capital market comprise a large portion of what is known as the financial market.
