2. Broad term describing any
marketplace where buyers and
sellers participate in the trade of
assets such as equities,
bonds, currencies and derivative
s.
Financial markets are typically
defined by having transparent
pricing, basic regulations on
trading, costs and fees and
market forces determining the
prices of securities that trade.
3. 1) Mobilisation of Savings and their Channelization into
more Productive Uses:
Financial market gives impetus to the savings of the people.
This market takes the uselessly lying finance in the form of
cash to places where it is really needed.
4. Facilitates Price Discovery:
The price of any goods or services is
determined by the forces of demand and
supply. Like goods and services, the
investors also try to discover the price of
their securities.The financial market is
helpful to the investors in giving them
proper price.
5. (3) Provides Liquidity to Financial Assets:
It means that the investors can invest their money,
whenever they desire, in securities through the medium of
financial market.
They can also convert their investment into money
whenever they so desire.
6. (4) Reduces the Cost ofTransactions:
The financial market makes available every
type of information without spending any
money. In this way, the financial market
reduces the cost of transactions.
7. Free flow of international capital
High market power at home
Flexibility in financing both current account deficit and
recycling current account surplus
rapid spreading of technology advancement in mode of
payments.
Increased methods of measuring market risk exposures.
8. Facilitates smooth consumption by borrowing or diversifying
abroad
Broad ownership also increases issuer’s products
There is a brokers and dealers benefit as they can broader
their product line
Large scope of business and ownership all over the globe
9.
10. Risk in electronic trading as it includes chances of forgery
Coordination problems between principal and agent
Explanation of the monetary policy can be misunderstood
Risk in structural changes in economic environment due to
monetary policies all over the world
11. Financial systems risks and advances
Hedge fund industry
Strengthening market and institutional resilience
Sovereign wealth funds
12. Continued growth of global
financial assets
Depth of financial markets
Regulation of International
Securities Market
Raise in the level of foreign
investment
15. The market in which participants from
around the world are able to buy, sell,
exchange and speculate on different
currencies. International currency
markets are made up of banks, commercial
companies, central banks, investment
management firms, hedge funds, retail forex
brokers and investors.
16. (i) Existence of Central Bank,
(ii) Highly organized commercial Banking System
(iii) Existence of sub-markets
(iv) Healthy competition in sub-markets
(v) Integrated structure of money market
(vi) Availability of proper credit instruments.
(vii) Adequacy and Elasticity of funds
(viii) International attraction
(ix) Uniformity of interest rates
(x) Stability of prices and
(xi) Highly developed Industrial system
17. Instruments
1.
• Eurocurrency
2.
• Euro credits
3.
• Euro certificate of deposits
4.
• Banker’s acceptance
5.
• Floating rate notes
6.
• Euro commercial papers
18. Capital markets are markets for buying and
selling equity and debt instruments.
Capital markets channel savings and investment between
suppliers of capital such as retail investors and institutional
investors, and users of capital like businesses, government
and individual.
Consists of primary and secondary market.
