financialmarket[共10页]

1、Main Contents,Financial Market Types of Financial Markets Functions of Financial Markets,Made by,A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and d

2、emand,What is financial market,Different Types of Financial Markets,Capital Market Capital Market consists of primary market and secondary market. In primary market newly issued bonds and stocks are exchanged and in secondary market buying and selling of already existing bonds and stocks take place.

3、 So, the Capital Market can be divided into Bond Market and Stock Market. Bond Market provides financing by bond issuance and bond trading. Stock Market provides financing by shares or stock issuance and by share trading. As a whole, Capital Market facilitates raising of capital,Money Market Money M

4、arket facilitates short term debt financing and investment. Derivatives market Derivatives Market provides instruments which help in controlling financial risk. Foreign Exchange market Foreign Exchange Market facilitates the foreign exchange trading. Insurance Market Insurance Market helps in redist

5、ribution of various risks,The functions of financial market mainly includes two aspects - Intermediary Functions & Financial Functions,The intermediary functions of a financial markets include the following: 1.Transfer of Resources: Financial markets facilitate the transfer of real economic resource

6、s from lenders to ultimate borrowers. 2.Enhancing income: Financial markets allow lenders to earn interest or dividend on their surplus invisible funds, thus contributing to the enhancement of the individual and the national income. 3.Productive usage: Financial markets allow for the productive use

7、of the funds borrowed. The enhancing the income and the gross national production. 4.Capital Formation: Financial markets provide a channel through which new savings flow to aid capital formation of a country,5.Price determination: Financial markets allow for the determination of price of the traded

8、 financial assets through the interaction of buyers and sellers. They provide a sign for the allocation of funds in the economy based on the demand and to the supply through the mechanism called price discovery process. 6.Sale Mechanism: Financial markets provide a mechanism for selling of a financi

9、al asset by an investor so as to offer the benefit of marketability and liquidity of such assets. 7.Information: The activities of the participants in the financial market result in the generation and the consequent dissemination of information to the various segments of the market. So as to reduce

10、the cost of transaction of financial assets,Financial Functions Providing the borrower with funds so as to enable them to carry out their investment plans. Providing the lenders with earning assets so as to enable them to earn wealth by deploying the assets in production debentures. Providing liquidity in the market so as to facilitate trading of funds. Providing liquid