chapter 1 Financial market

Chapter Financial market B2003 - Financial market Chapter : Financial market 1.1 Formation of financial market 1.2 Functions of financial market 1.3 Classification of financial markets 1.4 The Financial Market’s Commodities 1.5 Participants in financial markets B2003 - Financial market 1.1 Formation of financial market 1.1.1 The objective indispensability of the process of regulating capital 1.1.2 Formation base of financial market 1.1.3 Nature of financial market B2003 - Financial market 1.1.1 The objective indispensability of the process of regulating capital • Reproduction process requires a lot of capital • Investors look for the way to make their capital gain profit =>Regulating capital from surplus to inadequate places B2003 - Financial market 1.1.2 Formation of financial market • Forms of connecting Demand - Supply – Direct borrowing and lending – Via financial intermediaries – Issuing securities Forming financial market: the place in which trading of financial assets between buyers and sellers occurs B2003 - Financial market 1.2 Functions of financial market • • • • Function of conducting capital Function of forming price of financial assets based on market mechanism Function of guaranteeing the liquidity of financial assets Function of decreasing expense for research and circulation B2003 - Financial market 1.3 Classification of financial market • Based on the turnover term • Based on the specialization of market • Based on the turnover process of financial instruments B2003 - Financial market 1.3.1 Based on the turnover term Financial market consists of money market and capital market Money market Short-term Foreign capital market Exchange Inter-bank market Market Mortgage Stock Leasing market market market OTC Stock exchange Market Capital market B2003 - Financial market Money market • Concept of Money market – A market in which short-term money is traded (including short-term valued papers under a year) in the economy • Components of Money market: – Inter-bank market – Foreign exchange market – Short-term capital market B2003 - Financial market Capital market • Concept of capital market: – is the place for transactions of long-term capital instruments • Components of capital market: – Mortgage market – Leasing market – Securities market B2003 - Financial market 10 1.3.2 Based on the specialization of the market • Debt instrument market • Equity/capital instrument market • Derivatives market B2003 - Financial market 11 1.3.3 Based on the turnover process of financial instruments • Primary market • Secondary market B2003 - Financial market 12 1.4 The Financial Market’s Commodities • • • • • • • • Bill of Credit Inter-bank Loan Debenture Negotiable Certificate of Deposit (NCD) Banker's acceptance Bond Stock Derivatives B2003 - Financial market 13 1.5 Participants in financial markets • Deposit-taking institutions: – Commercial banks – Savings and loan associations B2003 - Financial market 14 Quiz for chapter 1- What’s financial market? 2-What is the difference between: • Primary and secondary market • Capital market and Money market • Debt market and equity market 3- You can buy stocks and bonds directly, or put your money in securities investment fund Why you choose the second option? B2003 - Financial market 15 Quiz for chapter 4- What are the key differences between a bank, a mutual fund and an insurance company? 6- What are the functions of financial market? Describe them 7- Why is liquidity important to investors? B2003 - Financial market 16 ... B2003 - Financial market 1. 1 Formation of financial market 1. 1 .1 The objective indispensability of the process of regulating capital 1. 1.2 Formation base of financial market 1. 1.3 Nature of financial.. .Chapter : Financial market 1. 1 Formation of financial market 1. 2 Functions of financial market 1. 3 Classification of financial markets 1. 4 The Financial Market’s Commodities 1. 5 Participants... Financial market 10 1. 3.2 Based on the specialization of the market • Debt instrument market • Equity/capital instrument market • Derivatives market B2003 - Financial market 11 1. 3.3 Based on the