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Financial Markets

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by

Candray Sunchez

on 16 November 2014

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Transcript of Financial Markets

*What are financial markets?
*Benefits of Financial markets
*Why firms Invest and borrow?
*Methods by which financial markets transfer funds
*Classification of Financial Markets
Group 1 : Chapter 4
These are markets that provide a permanent venue for savers, and borrowers and which render financial services whenever required by their customers.


What are Financial Markets?
1. Funds are directed to DSU's which can use them most efficiently

2.liquidity is provided to users


Benefits of Financial Markets
1. quantity discounts for bulk purchases granted suppliers

2.additional revenue from sales
Why firms Invest and borrow?
SUMMARY
Private Placements



Financial Markets
Methods by which financial markets transfer funds
Direct Finance
refers to lending by ultimate borrowers with no intermediary.Under this method, the SSU gives money to the DSU in exchange for financial claims on the DSU. The claims issued by the DSU are called DIRECT CLAIMS and are typically sold in direct credit markets such as Money and Capital
Methods of Direct finance
Investment brokers
Brokers & Dealers
refers to the selling of securities by private negotiation directly to insurance companies, commercial banks, pension funds, large scale corporate investors, and wealthy individuals.
Broker- acts as an intermediary between buyers and sellers but it does not take title to the securities traded.

Dealer- one in the security business acting as principal rather than an agent. The dealer buys for his account and sells customers from inventory
a person who provides financial advice and who underwrites and distributes new investment securities
Indirect Finance
refers to lending by an ultimate lender to a financial intermediary that then relends to ultimate borrowers. Financial intermediaries include commercial banks, mutual savings banks credit unions lie insurance companies, and pension funds
Classification of
Financial Markets
1.
Primary Market-
newly issued primary and secondary securities are traded for the first time
2.
Secondary Market
- financial Market through which existing financial securities are traded
3.
Money Market
- financial market on which debt securities with an original maturity of one year or less are traded.
4.
Capital Market
- market where trading is undertaken for securities
5.
Bond Market
- market for debt instruments.
6.
Stock Market
- common and preferred stocks issued by corporations are traded
7.
Mortage Market
- deals with loans on residential, commercial and industrial real estate, and on farmland
8.
Consumer Credit Market
- involved in loans on autos, appliances, education and travel
9.
Auction Market
-Stocks are sold to the highest bidder on the trading floors.
10.
Negotiation Market
- buyers and sellers Negotiate with each other regarding price and volume.
11.
Organized Market
-financial Market with fixed trading rules.
12.
Over The Counter Market
- Market Consisting of large collection of brokers and dealers
13.
Spot Market
-securities are traded for immediate delivery and payment
14.
Futures Market
- Contracts are originated and traded that give the holder the right to buy something in the future at a price specified by contract
15.
Options Market
- One where stock options are traded.

16.
Foreign Exchange
Market- The Market where people buy and sell foreign currencies
Full transcript