financial market and institutation

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Group information

Sana Mehreen Waqas Ahmad Iqra Saeed

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CONTENTS

FINANCIAL MARKETS FINANCIAL INSTITUTIONS

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I. AN OVERVIEW OF FINANCIAL MARKETS

What is Financial Market? Structure of Financial markets? Instruments traded in Financial

markets? Functions of Financial markets

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What is Financial system?

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What are Financial Markets?

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What is Financial Markets?

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We will start our discussion on financial markets with some basic definitions……

I.2 Structure of Financial Markets

Financial markets can be categorized as follows:

Debt vs Equity markets Primary vs Secondary markets Money vs Capital Markets

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Debt Debt titles are the most commonly traded security.

Types of Debt:short term long term intermediate terms

Common debt titles are bonds or mortgages.

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Equity“The value of the shares issued by a company.”○ E.g.:

- Preferred shares- Common shares

○ Equity do not expire and their maturity is, thus, infinite.

○ They are considered long term securities.

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PRIMARY MARKETS Vs SECONDERY MARKETS

Markets are divided into primary and secondary markets

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MONEY MARKETS VS CAPITAL MARKETS

Finally, we make a distinction between money and capital markets.

Money markets are markets in which only short term debt titles are traded.

Capital markets are markets in which longer term debt and equity instruments are traded.

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Functions of Financial markets

Borrowing and Lending

Price Determination

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Functions of Financial markets

Coordination and Provision of Informationa

Risk Sharing

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Functions of Financial markets

◦Liquidity

◦Efficiency

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FINANCIAL INSTITUTIONS

What are Financial Institutions? Financial Institutions and their function Types of Financial Institutions

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What are Financial Institutions ?

“Establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Conventionally”

○we roughly use four categories:BrokersDealersInvestment banksFinancial intermediaries

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What are Financial Institutions? (Cont)

Brokers are agents who match buyers with sellers for a desired transaction.

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What are Financial Institutions? (Cont)

◦Like brokers, dealers match sellers and buyers of financial assets.

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What are Financial Institutions? (Cont)

Investment Banks

○ Investment banks assist in the initial sale of newly issued securities .

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What are Financial Institutions? (Cont)

Financial Intermediaries

○ Financial intermediaries match sellers and buyers indirectly through the

process of financial asset transformation.

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