Muhammad Abid 34

Shabaz abdul manaf 30

Muhammad salman 24

Shahzad shah 52

Arusa nadeem 53

Financial markets

Money

market

Capital

market

It is the market for sale and

purchase of

stocks(shares),bonds, bills of

exchange, foreign currency etc

which works as liquid asset.

As per RBI definition “a market for short terms financial assets that are close substitute for money facilitates the exchange of money in primary and secondary market”.

The money market is a mechanism that deals with the lending and borrowing of short term funds (less than one year).

• The organization for the

lending of short –term fund,

through the use of such

instruments as commercial

bills of exchange , short term

government securities and

bankers acceptance.

In 1971, mutual money market funds

were introduced.

IN 1980,money market funds

become a popular alternative

because the rate of interest was

very high .

Today, money market funds have

grown to 2.7 trillion and become a

pillar of capital market.

Financing trade.

Financing industry.

Profitable investment.

Help to implement monetary policy.

Determine short term interest rates.

Medium to control creation of credit.

Self –sufficiency of commercial bank.

Call money

market

Collateral

loan market

Acceptance

market

Bill or

discount

market

Commercial papers.

Certificates of deposit.

Inter-bank participation certificate.

Municipal notes.

banker’s acceptance.

Repurchase agreement.

Money market mutual fund.

Treasury bills.

The

central

bank

Private

individuals

partnership

and

companies

Commercial bank

Institution

al investors

Highly organized commercial banking system

Presence of a central bank

Availability of proper credit instrument

Existence of a number 0f sub markets

Financing in industry and commerce

Investment of short term funds

Help to the central bank

Help to the government

Loose and disjoined structure.

Wasteful competition.

Shortage of capital.

Inadequate banking facilities.

Seasonal shortage of funds.

Disparity in interest rates in different centers.

Undeveloped bill market.

Inelasticity and instability.

Absence of sub markets.

Steps has been taken to establish relation

between indigenous bankers and commercial

banker.

Reducing monetary shortage though open

market operations.

Diversifying the market.

Assess to bill rediscounting market

increasingly .

The activities of the money lender and chit fund

should brought under control.

Banking facilities should be extended especially in

the unbanked and neglected areas.

The number of clearing house should be increased.

Adequate and easy remittance facilities should be

provided to the businessman.

Harmony between sub market and co ordination of

their activities must be achieved.

An increase in secured funding.

Changes in repo market.

Capital market is the part of financial

system which is concerned with raising

capital funds by dealing in shares ,bonds,

and other long-term investment.

The market where investment

instruments like bonds, equities and

mortgages are traded is known as the

capital market.

Equity instruments.

Credit market instruments.

Insurance instruments.

Foreign exchange instruments.

Hybrid instruments .

Mobilization of savings.

Link between savers and investors.

Encouragement to saving.

Speed up economic growth and

development.

Encouragement to investment.

Stability in security prices.

Commercial banks.

Insurance companies.

Business corporations.

Retirement funds.

Treasury department.

Corporations.

Securities dealers.

Primary market .

Secondary market.

It is that market in which shares,

debentures and other securities and sold

for the first time for collecting long-term

capital.

This market is concerned with new issues.

Therefore, the primary market is also

called new issue market.

The secondary market is that market in

which the buying and selling of the

previously issued securities is done.

1. Inflation.

2. Population.

3. Education.

4. Poverty.

5. Unemployment.

1. Wealth management growth.

2. Globalization opportunities.

3. Tying operating model to

electronic trading.

4. Innovation

5. Compensation and talent

Marginal product of capital (MPK)

Enhance government purchases.

Improve the regulatory system.

Developed a good business strategy.

Improve market structure.

Money market Capital market

It is a market for short term loans.

The instruments of money market are.

(a) promissory notes (b)bills of exchange (c) treasury bills (d) call loans

The instruments of money market are highly liquid.

The main institutions of market are bill market , commercial banks , acceptance houses discount houses central banks.

The money market revolves mostly around the commercial banks.

The demand for short term loans comes from government industrial and commercial concerns ,merchants ,stock exchange.

This market is for long term loans.

The instruments of capital market are

(a) debentures (b) mortgages (c) shares (d) FIBS

The instruments of capital market are not liquid.

The main institutions of capital market are insurance companies investment banks, commercial banks, stock market.

Commercial banks play a part but they are not the centre of activation in the capital market.

The demand for long term loans comes from private sector manufacturing industries companies and government.

The lack of an advance and vibrant capital market can lead to underutilization of financial recourses. the developed capital market also provides access to the foreign capital for domestic industry . Thus capital market definitely plays a constructive role in the over all development of an economy.

The money market specializes in debt security that mature in less than one year .

Money market securities are very liquid and are considered very safe. As a result , they offer a lower return than other securities.