Financial management / objectives / money market / capital market
1. INDIAN FINANCIAL SYSTEM WITH
TO MONEY AND CAPITAL
2. OBJECTIVE OF FINANCIAL MANAGEMENT.
DONE BY :
INDIAN FINANCIAL SYSTEM WITH
REFERNECE TO : CAPITAL MARKETS
-- The Indian financial system comprises of all these financial
constituents. There are two types of financial institutions‒
banking and non-banking. Financial markets are divided into two
categories ‒ money market and capital market. Capital market
are further divided into three categories namely corporate
securities, government securities and derivatives. Capital
markets in India form an essential part of the financial system.
-- Capital market is a market which consists of long-term debt
instruments and equity shares. Capital funds are raised by the
entrepreneurs in the form of debt and equity instruments only.
FUNCTION OF A CAPITAL MARKET
MOBILIZATION OF THE SAVINGS.
AVAILABILITY OF FUNDS.
OPTIMUM UTILIZATION OF
CLASSIFICATION OF CAPITAL
MARKETS IN: PRIMARY AND
PRIMARY MARKETS :-
In the primary market, the securities be it shares, bonds and
debentures are offered to the public for subscription for the purpose
of raising capital. The issue of certificates is regulated by the
Securities and Exchange Board of India and the Companies Act.
The primary market is further classified into 'public issue market' and
'private issue market'.
SECONDARY MARKETS : In the secondary market, the securities are purchased and sold
once it is first offered to the public in the primary market or once
they are listed in the stock exchanges. The secondary markets
comprises of equity markets and debt markets. It is an avenue
where already existing securities are bought and sold amongst
the investors. The secondary market can function as an auction
market or as a dealer market.
INDIAN FINANCIAL SYSTEM WITH
REFERENCE TO : MONEY MARKETS
As per RBI definitions “ 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
A segment of the financial market in which financial
instruments with high liquidity and very short maturities
FUNCTIONS OF A MONEY MARKET
Transaction have to be conducted without the help of
It is not a single homogeneous market, it comprises of
several submarket like call money market, acceptance
& bill market.
The component of Money Market are the commercial
banks, acceptance houses & NBFC (Non-banking
In Money Market transaction can not take place formal
communication, relevant document and written
communication transaction can be done.
DEBT / EQUITY
PERIOD OF 1
OBJECTIVES OF FINANCIAL
The objective provide a framework for optimum
financial decision making. They are concerned
with designing a method of operating the
internal investment and financing of a
firm.there are two widely discussed
approaches under this, these are:
Profit /EPS maximization should be undertaken and
those that decrease profits or EPS are to be avoided. Profit
is the test of economic efficiency. It leads to efficient
allocation of resources, as resources tend to be directed to
uses which in terms of profitability are the most desirable.
Financial management is mainly concerned with the
efficient economic resources namely capital. The main
technical flaws of this criteria are :
Timing of benefits
Quality of benefits.
Wealth maximization is also known as Value or Net
present worth maximization. Its operational features
satisfy all the three requirements of the operational of the
financial course of action namely, exactness, quality of
benefits, and the time value of money. Two important issues
related to the value/share price maximization are:
Focus on stakeholders ,stakeholders include
groups such as
employees, customers, suppliers, creditors, owners
and others who have a direct link to the firm.
EVA (Economic Value Added) –EVA is equal to the
after-tax operating profits of a firm less the cost of the
firm to finance investments.