SlideShare a Scribd company logo
1 of 13
Download to read offline
THE FINANCIAL
ENVIRONMENT
-
1
THE FINANCIAL ENVIRONMENT
MARKETS
INSTITUTIONS
INTEREST RATES
-
Financial markets
Types of financial institutions
3
WHAT IS A FINANCIAL
MARKET?
 A market is a venue where goods and services
are exchanged.
 A financial market is a place where individuals
and organizations wanting to borrow funds are
brought together with those having a surplus of
funds.
4
FLOW OF FUNDS FROM
LENDERS TO BORROWERS:
5
THE FINANCIAL
MARKETS:
 Money VS. capital markets
 Primary VS. secondary markets
 Public VS. private markets
6
THE FINANCIAL
MARKETS:
 The Money Market:
Exchange of short-term instruments—less than one
year
Highly liquid, minimal risk
 Commercial paper—short-term liabilities of prime business firms and
finance companies
 Bank Certificates of Deposits—liabilities of issuing bank, interest
bearing to corporations that hold them
 Treasury bills—short-term debts of government
7
THE FINANCIAL
MARKETS:
 The Capital Market:
Exchange of long-term securities—in excess of one
year
Generally used to secure long-term financing for capital
investment.
 Stock market—Largest part of capital market and held by private and
institutional investors
 Residential and commercial mortgages—Held by commercial banks
and life insurance companies
 Corporate bond market—Held by insurance companies, pension and
retirement funds
8
THE FINANCIAL
MARKETS:
 Primary Markets:
 Market for issuing a new security and distributing to saver-
lenders.
 Initial Public Offering Market (IPO).
 Investment Banks—Information and marketing specialists for
newly issued securities.
9
THE FINANCIAL
MARKETS:
 Secondary Markets:
 Market where existing securities can be exchanged
 Bombay Stock Exchange
American Stock Exchange
Bombay Stock Exchange
10
FINANCIAL
INSTITUTIONS:
Funds are transferred between those who have funds and those
who need funds by three processes:
 Direct transfers,
 Investment banking houses, or
 Financial intermediaries.
11
FINANCIAL
INTERMEDIARIES:
 Commercial banks
 Credit unions
 Pension funds
 Life insurance companies
 Mutual funds
12
Prepared by
HardikAsha
13

More Related Content

What's hot

Introduction to Foreign Exchange
Introduction to Foreign ExchangeIntroduction to Foreign Exchange
Introduction to Foreign ExchangeICAB
 
The Financial Environment
The Financial EnvironmentThe Financial Environment
The Financial EnvironmentSayed Janan
 
money market and capital market
money market and capital marketmoney market and capital market
money market and capital marketPrateek Nepal
 
International financial market & instruments module 3
International financial market & instruments   module 3International financial market & instruments   module 3
International financial market & instruments module 3Vishnu Vijay
 
Financial services
Financial servicesFinancial services
Financial servicesSrujan Kumar
 
1. introduction to corporate finance
1. introduction to corporate finance1. introduction to corporate finance
1. introduction to corporate financeirfan_1
 
International bond market
International bond marketInternational bond market
International bond marketMayur Ingole
 
L I C & G I C
L I C &  G I CL I C &  G I C
L I C & G I Cbnharsha
 
Security Markets
Security MarketsSecurity Markets
Security MarketsASAD ALI
 
Foreign exchange market-final ppt(my)
Foreign exchange market-final ppt(my)Foreign exchange market-final ppt(my)
Foreign exchange market-final ppt(my)J Prateek Kundu
 
Pricing forward & future contracts
Pricing forward & future contractsPricing forward & future contracts
Pricing forward & future contractsAmeya Ranadive
 
Investment management
Investment managementInvestment management
Investment managementhadi Hedayati
 
Introduction to derivatives
Introduction to derivativesIntroduction to derivatives
Introduction to derivativesAmeya Ranadive
 
Futures and future contracts & trading mechanism of derivatives on stock...
Futures and future contracts & trading mechanism of  derivatives on stock...Futures and future contracts & trading mechanism of  derivatives on stock...
Futures and future contracts & trading mechanism of derivatives on stock...Ameya Ranadive
 
Foreign exchange market (forex market)
Foreign exchange market  (forex market)Foreign exchange market  (forex market)
Foreign exchange market (forex market)neelakshi81
 

What's hot (20)

Money Market
Money MarketMoney Market
Money Market
 
Introduction to Foreign Exchange
Introduction to Foreign ExchangeIntroduction to Foreign Exchange
Introduction to Foreign Exchange
 
The Financial Environment
The Financial EnvironmentThe Financial Environment
The Financial Environment
 
money market and capital market
money market and capital marketmoney market and capital market
money market and capital market
 
International financial market & instruments module 3
International financial market & instruments   module 3International financial market & instruments   module 3
International financial market & instruments module 3
 
Financial services
Financial servicesFinancial services
Financial services
 
Treasury bills
Treasury bills Treasury bills
Treasury bills
 
1. introduction to corporate finance
1. introduction to corporate finance1. introduction to corporate finance
1. introduction to corporate finance
 
International bond market
International bond marketInternational bond market
International bond market
 
L I C & G I C
L I C &  G I CL I C &  G I C
L I C & G I C
 
Security Markets
Security MarketsSecurity Markets
Security Markets
 
Foreign exchange market-final ppt(my)
Foreign exchange market-final ppt(my)Foreign exchange market-final ppt(my)
Foreign exchange market-final ppt(my)
 
Pricing forward & future contracts
Pricing forward & future contractsPricing forward & future contracts
Pricing forward & future contracts
 
Investment management
Investment managementInvestment management
Investment management
 
Introduction to derivatives
Introduction to derivativesIntroduction to derivatives
Introduction to derivatives
 
Futures and future contracts & trading mechanism of derivatives on stock...
Futures and future contracts & trading mechanism of  derivatives on stock...Futures and future contracts & trading mechanism of  derivatives on stock...
Futures and future contracts & trading mechanism of derivatives on stock...
 
Foreign exchange market (forex market)
Foreign exchange market  (forex market)Foreign exchange market  (forex market)
Foreign exchange market (forex market)
 
Indian financial system ppt
Indian financial system pptIndian financial system ppt
Indian financial system ppt
 
Financial services
Financial servicesFinancial services
Financial services
 
International monetary system
International monetary systemInternational monetary system
International monetary system
 

Viewers also liked

Financial environment
Financial environmentFinancial environment
Financial environment260167
 
International financial management
International financial managementInternational financial management
International financial managementVisakhapatnam
 
Economic environment
Economic environmentEconomic environment
Economic environmentchotanawab
 
Foreign investments in india
Foreign investments in indiaForeign investments in india
Foreign investments in indiaAditya Kumar
 
18 Questions for Pre-Revenue Valuation of a Startup
18 Questions for Pre-Revenue Valuation of a Startup18 Questions for Pre-Revenue Valuation of a Startup
18 Questions for Pre-Revenue Valuation of a StartupAndrew Stotz, PhD, CFA
 
Define the term financial management
Define the term financial managementDefine the term financial management
Define the term financial managementShameem Anwar
 
賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願
賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願
賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願長野市議会議員小泉一真
 
Types of cooperative societies
Types of cooperative societiesTypes of cooperative societies
Types of cooperative societiesSruthy Ajith
 
4.Test Bank for The Legal Environment of Business 12th Edition by Meiners
4.Test Bank for The Legal Environment of Business 12th Edition by Meiners4.Test Bank for The Legal Environment of Business 12th Edition by Meiners
4.Test Bank for The Legal Environment of Business 12th Edition by Meinersvados ji
 
Mv u29 assignment 1 form
Mv u29 assignment 1 formMv u29 assignment 1 form
Mv u29 assignment 1 formJosh Sunley
 
長野県・大北森林組合補助金不正事件に係る住民監査請求の結果
長野県・大北森林組合補助金不正事件に係る住民監査請求の結果長野県・大北森林組合補助金不正事件に係る住民監査請求の結果
長野県・大北森林組合補助金不正事件に係る住民監査請求の結果長野市議会議員小泉一真
 
Role of banks in financial markets
Role of banks in financial marketsRole of banks in financial markets
Role of banks in financial marketsAkhil Prabhakar
 

Viewers also liked (20)

Financial environment
Financial environmentFinancial environment
Financial environment
 
Financial Environment
Financial EnvironmentFinancial Environment
Financial Environment
 
Financial environment
Financial environmentFinancial environment
Financial environment
 
Financial environment 3
Financial environment 3Financial environment 3
Financial environment 3
 
Financial environment2
Financial environment2Financial environment2
Financial environment2
 
International financial management
International financial managementInternational financial management
International financial management
 
Economic environment
Economic environmentEconomic environment
Economic environment
 
World financial center
World financial centerWorld financial center
World financial center
 
Foreign investments in india
Foreign investments in indiaForeign investments in india
Foreign investments in india
 
c.v
c.vc.v
c.v
 
18 Questions for Pre-Revenue Valuation of a Startup
18 Questions for Pre-Revenue Valuation of a Startup18 Questions for Pre-Revenue Valuation of a Startup
18 Questions for Pre-Revenue Valuation of a Startup
 
Define the term financial management
Define the term financial managementDefine the term financial management
Define the term financial management
 
賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願
賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願
賛成させてほしかった―オスプレイ低空飛行訓練中止を求める請願
 
Types of cooperative societies
Types of cooperative societiesTypes of cooperative societies
Types of cooperative societies
 
Financial environment interest rate
Financial environment interest rateFinancial environment interest rate
Financial environment interest rate
 
4.Test Bank for The Legal Environment of Business 12th Edition by Meiners
4.Test Bank for The Legal Environment of Business 12th Edition by Meiners4.Test Bank for The Legal Environment of Business 12th Edition by Meiners
4.Test Bank for The Legal Environment of Business 12th Edition by Meiners
 
Mv u29 assignment 1 form
Mv u29 assignment 1 formMv u29 assignment 1 form
Mv u29 assignment 1 form
 
長野県・大北森林組合補助金不正事件に係る住民監査請求の結果
長野県・大北森林組合補助金不正事件に係る住民監査請求の結果長野県・大北森林組合補助金不正事件に係る住民監査請求の結果
長野県・大北森林組合補助金不正事件に係る住民監査請求の結果
 
Role of banks in financial markets
Role of banks in financial marketsRole of banks in financial markets
Role of banks in financial markets
 
Marketing environment
Marketing environmentMarketing environment
Marketing environment
 

Similar to The-financial-environment

Financial market
Financial marketFinancial market
Financial marketRajeswari B
 
Unit 1: Introduction
Unit 1: IntroductionUnit 1: Introduction
Unit 1: IntroductionAar Teewaaree
 
Financial markets
Financial marketsFinancial markets
Financial marketsDaveIsoy
 
Commercial papers and certificate of deposit
Commercial papers and certificate of depositCommercial papers and certificate of deposit
Commercial papers and certificate of depositDharmik
 
Financialmarket 121221105534-phpapp01
Financialmarket 121221105534-phpapp01Financialmarket 121221105534-phpapp01
Financialmarket 121221105534-phpapp01Shah Abdul Azeem
 
FIMS PPT 999.pdf
FIMS PPT 999.pdfFIMS PPT 999.pdf
FIMS PPT 999.pdfmanjuchu76
 
Financial markets instruments
Financial markets instrumentsFinancial markets instruments
Financial markets instrumentsmanjuchu76
 
Financial markets and institutions ITM3
Financial markets and institutions ITM3Financial markets and institutions ITM3
Financial markets and institutions ITM3Aram Mohammed
 
International Finan
International FinanInternational Finan
International FinanAjeesh Mk
 
Indian Financial System
Indian Financial SystemIndian Financial System
Indian Financial SystemAjeesh Mk
 
Assingment on money market
Assingment  on money marketAssingment  on money market
Assingment on money marketAmanullah Trino
 
Financial system(kapil)
Financial system(kapil)Financial system(kapil)
Financial system(kapil)kapil kumar
 

Similar to The-financial-environment (20)

Financial market
Financial marketFinancial market
Financial market
 
Difference between money market and capital market
Difference between money market and capital marketDifference between money market and capital market
Difference between money market and capital market
 
Unit 1: Introduction
Unit 1: IntroductionUnit 1: Introduction
Unit 1: Introduction
 
Financial markets
Financial marketsFinancial markets
Financial markets
 
Commercial papers and certificate of deposit
Commercial papers and certificate of depositCommercial papers and certificate of deposit
Commercial papers and certificate of deposit
 
Education
EducationEducation
Education
 
Financialmarket 121221105534-phpapp01
Financialmarket 121221105534-phpapp01Financialmarket 121221105534-phpapp01
Financialmarket 121221105534-phpapp01
 
Mm vs-cm
Mm vs-cmMm vs-cm
Mm vs-cm
 
FIMS PPT 999.pdf
FIMS PPT 999.pdfFIMS PPT 999.pdf
FIMS PPT 999.pdf
 
Financial markets instruments
Financial markets instrumentsFinancial markets instruments
Financial markets instruments
 
Financial markets and institutions ITM3
Financial markets and institutions ITM3Financial markets and institutions ITM3
Financial markets and institutions ITM3
 
International Finan
International FinanInternational Finan
International Finan
 
Indian Financial System
Indian Financial SystemIndian Financial System
Indian Financial System
 
312143
312143312143
312143
 
Chapter 3
Chapter 3Chapter 3
Chapter 3
 
Assingment on money market
Assingment  on money marketAssingment  on money market
Assingment on money market
 
Financial system(kapil)
Financial system(kapil)Financial system(kapil)
Financial system(kapil)
 
Mangesh naik (2)
Mangesh naik (2)Mangesh naik (2)
Mangesh naik (2)
 
Ch001
Ch001Ch001
Ch001
 
Ch001
Ch001Ch001
Ch001
 

Recently uploaded

Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfChicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfSourav Sikder
 
MoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor PresentationMoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor Presentationbaron83
 
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...Khaled Al Awadi
 
Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..dlewis191
 
To Create Your Own Wig Online To Create Your Own Wig Online
To Create Your Own Wig Online  To Create Your Own Wig OnlineTo Create Your Own Wig Online  To Create Your Own Wig Online
To Create Your Own Wig Online To Create Your Own Wig Onlinelng ths
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access
 
Project Brief & Information Architecture Report
Project Brief & Information Architecture ReportProject Brief & Information Architecture Report
Project Brief & Information Architecture Reportamberjiles31
 
Developing Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursDeveloping Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursKaiNexus
 
Fabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsFabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsWristbands Ireland
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access
 
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)tazeenaila12
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato pptElizangelaSoaresdaCo
 
Anyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agencyAnyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agencyHanna Klim
 
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfAMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfJohnCarloValencia4
 
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John MeulemansBCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John MeulemansBBPMedia1
 
Data skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsData skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsyasinnathani
 
Cracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptxCracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptxWorkforce Group
 
Intellectual Property Licensing Examples
Intellectual Property Licensing ExamplesIntellectual Property Licensing Examples
Intellectual Property Licensing Examplesamberjiles31
 
7movierulz.uk
7movierulz.uk7movierulz.uk
7movierulz.ukaroemirsr
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.mcshagufta46
 

Recently uploaded (20)

Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfChicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
 
MoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor PresentationMoneyBridge Pitch Deck - Investor Presentation
MoneyBridge Pitch Deck - Investor Presentation
 
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
 
Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..
 
To Create Your Own Wig Online To Create Your Own Wig Online
To Create Your Own Wig Online  To Create Your Own Wig OnlineTo Create Your Own Wig Online  To Create Your Own Wig Online
To Create Your Own Wig Online To Create Your Own Wig Online
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024
 
Project Brief & Information Architecture Report
Project Brief & Information Architecture ReportProject Brief & Information Architecture Report
Project Brief & Information Architecture Report
 
Developing Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, OursDeveloping Coaching Skills: Mine, Yours, Ours
Developing Coaching Skills: Mine, Yours, Ours
 
Fabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and FestivalsFabric RFID Wristbands in Ireland for Events and Festivals
Fabric RFID Wristbands in Ireland for Events and Festivals
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024
 
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato ppt
 
Anyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agencyAnyhr.io | Presentation HR&Recruiting agency
Anyhr.io | Presentation HR&Recruiting agency
 
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfAMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
 
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John MeulemansBCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
BCE24 | Virtual Brand Ambassadors: Making Brands Personal - John Meulemans
 
Data skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story pointsData skills for Agile Teams- Killing story points
Data skills for Agile Teams- Killing story points
 
Cracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptxCracking the ‘Business Process Outsourcing’ Code Main.pptx
Cracking the ‘Business Process Outsourcing’ Code Main.pptx
 
Intellectual Property Licensing Examples
Intellectual Property Licensing ExamplesIntellectual Property Licensing Examples
Intellectual Property Licensing Examples
 
7movierulz.uk
7movierulz.uk7movierulz.uk
7movierulz.uk
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.
 

The-financial-environment

  • 3. - Financial markets Types of financial institutions 3
  • 4. WHAT IS A FINANCIAL MARKET?  A market is a venue where goods and services are exchanged.  A financial market is a place where individuals and organizations wanting to borrow funds are brought together with those having a surplus of funds. 4
  • 5. FLOW OF FUNDS FROM LENDERS TO BORROWERS: 5
  • 6. THE FINANCIAL MARKETS:  Money VS. capital markets  Primary VS. secondary markets  Public VS. private markets 6
  • 7. THE FINANCIAL MARKETS:  The Money Market: Exchange of short-term instruments—less than one year Highly liquid, minimal risk  Commercial paper—short-term liabilities of prime business firms and finance companies  Bank Certificates of Deposits—liabilities of issuing bank, interest bearing to corporations that hold them  Treasury bills—short-term debts of government 7
  • 8. THE FINANCIAL MARKETS:  The Capital Market: Exchange of long-term securities—in excess of one year Generally used to secure long-term financing for capital investment.  Stock market—Largest part of capital market and held by private and institutional investors  Residential and commercial mortgages—Held by commercial banks and life insurance companies  Corporate bond market—Held by insurance companies, pension and retirement funds 8
  • 9. THE FINANCIAL MARKETS:  Primary Markets:  Market for issuing a new security and distributing to saver- lenders.  Initial Public Offering Market (IPO).  Investment Banks—Information and marketing specialists for newly issued securities. 9
  • 10. THE FINANCIAL MARKETS:  Secondary Markets:  Market where existing securities can be exchanged  Bombay Stock Exchange American Stock Exchange Bombay Stock Exchange 10
  • 11. FINANCIAL INSTITUTIONS: Funds are transferred between those who have funds and those who need funds by three processes:  Direct transfers,  Investment banking houses, or  Financial intermediaries. 11
  • 12. FINANCIAL INTERMEDIARIES:  Commercial banks  Credit unions  Pension funds  Life insurance companies  Mutual funds 12