The document discusses money markets and capital markets. It defines money markets as markets for short-term assets with maturities of less than one year, like treasury bills and commercial paper. Capital markets deal with longer term debt and equity securities. The key difference between the two is that money markets focus on short term funds less than a year, while capital markets provide long term funding over a year. Various tax systems are also summarized, including direct, indirect, proportional, progressive, and regressive taxes.

1. Money Market
Definition;
Money market refers to the market for short term assets that
are close substitutes of money, usually with maturities of less
than a year.
According to Geoffery Crowthec; ‘’Money market is a collective name
given to the various forms and institutions that deal with various
grades of money’’

2. Instruments of Money Market
Treasury bills
Certificates of Deposit.
Commercial Paper.
Bill of Exchange.
 Main institutions of M.M
 Central Bank ( State Bank of Pakistan)
 Commercial Banks.
 Individual firms, companies.

3. Features of M.M;
Market for short term funds.
Deal with assets having maturity period less than 1 year.
It is not a single market, but a collection of several submarket.
It adjust the liquidity.
Objective of M.M;
Provide opportunity for overcoming short term deficits.
To provide access to user of short term to meet their requirement quickly adequately at reasonable cost.
Importance of M.M;
Development of trade and industry.
Development of capital market.
It carry less risk than long term debt.

4. CAPITAL MARKET
•“It is a market of new term bonds and securities
in which people make investment.”
•Capital market are financial market for buying
and selling of long term debt and securities.

5. •Selling bonds and selling stock are two ways
to generate capital.
•Stock and bond market are parts of
capital market.

6. Types of capital
market
•Primary Market
•Secondary Market

7. • Primary Market
• The primary market is the part
of the capital market that deals
with issuing of new securities.
Companies, governments or public
sector institutions can obtain funds
through the sale of a new stock or
bond issues through primary
market.
• Secondary Market
• A market where investors
purchase securities or assets from
other investors, rather than from
issuing companies themselves. The
national exchanges - such as the
New York Stock Exchange and the
NASDAQ are secondary
markets.

8. DIFFERENCE BETWEEN MONEY
AND CAPITAL MARKET
MONEY MARKET CAPITAL MARKET
DURATION Its for short term funds.(1yr or
less)
Its for long term funds. (more than
one yr)
NATURE OF FUNDS Supplies funds for working capital
requirements
Supplies funds for fixed capital
requirements.
INSTRUMENTS T-bills, Commercial papers,
certificates of deposits etc
Shares, debentures bonds etc.
AMOUNT OF
INSTRUMENT
Each single instrument is of large
amount.
Each single instrument is of small
amount.

9. MONEY MARKET CAPITAL MARKET
INSTITUTIONS Central banks, commercial banks,
bill brokers etc.
Stock exchanges, commercial
banks and other institutions like
insurance companies, etc.
RISK Less risk involved due to short
term of maturity.
Risk is higher.
TRANSACTIONS Transactions are not at formal
place.
Transactions are at formal place.
BROKER Transactions without the help of
broker.
Transactions with the help of
broker.

10. MONEY MARKET CAPITAL MARKET
EXPECTED
RETURN
Less returns Higher returns.
PARTICIPANTS Individual investors,
financial institutions,
corporate house etc.
Commercial banks etc.

11. STOCK EXCHANGE
• The word “Stock Exchange” is made from two words 'Stock' and Exchange.
Stock means part or fraction of the capital of a company, and Exchange
means a transferring the ownership; representing a market for purchasing
and selling. Thus, we can describe the stock exchange as a market or a place
where different types of securities are bought and sold. Securities traded on a
stock exchange include shares issued by companies, unit trusts, derivatives,
pooled investment products and bonds.

12. FEATURES OF STOCK EXCHANGE
• Organized Market:
• Stock exchange is an organized market of securities (shares, debentures, bonds, etc.)
where the securities are bought and sold on the floor of a stock exchange. All
transactions are regulated by the rules and bye-laws of the concerned stock
exchange.
• Formation & Membership: A stock exchange is generally registered as an
association or a society or a company. The membership of the stock exchange is
restricted to a certain number, and new members are admitted only when there are
vacancies. Every member has to pay the prescribed membership fee.

13. Only Members Can Trade:
Stock exchange is only open to the members of exchange also known as brokers.
Brokers act as an agent of the buyers and sellers of shares, debentures and
bonds. In a stock exchange, transactions take place between members or their
authorized agents on behalf of the investors.- Learn more at
www.technofunc.com. Your online source for free professional tutorials.
Necessary to Obey the Rules and Bye-laws:
While transacting in Stock Exchange, it is necessary to obey the rules and bye-
laws determined by the Stock Exchange.

14. STOCK EXCHANGE MARKETS
• New York Stock Exchange (USA)
• NASDAQ(USA)
• Shanghai Stock Exchange(CHINA)
• Japan Exchange Group (JAPAN)
• Euronext(EUROPEAN UNION)

15. TAXATION
• Definition:
• Taxes are the most important source of Government revenue. An economist
has defined taxes as: “Taxes are the general compulsory contribution of wealth
levied upon person, natural, or corporate to defray the expenses incurred in
conferring common benefit upon the residents of the state.”
• Generally speaking, taxes are being paid for the social welfare of the people. The
Government uses the tax revenue to create facilities and other necessary
environment of the people.

16. KINDS OF TAXES
• DIRECT TAX
• INDIRECT TAX
• PROPORTIONAL TAX
• PROGRESSIVE TAX
• REGRESSIVE TAX

17. • DIRECT TAX:
• These taxes are those whose
incident cannot be shifted to
anyone else. Such a tax is to be
borne by a tax payer himself.
Incidence of tax means a burden
cannot be transferred to anyone
else.
• For example, income tax.
• INDIRECT TAX:
• It is the tax whose incidence is
actually being shifted to the
ultimate consumer. We can see
the transferring process takes
place from the entrepreneur right
down on the ultimate consumer.
An example of indirect tax would
be daily commodities. E.g. food,
clothing etc. The kind of taxes
imposed are excise tax, sales tax.
Etc.

18. • PROPORTIONAL TAX:
• A proportional tax is one that
has to be paid at fixed rate,
i.e. to say it is a fixed rate to
everyone.
• Thus, if the tax rate of
taxation as income tax is 5%,
then it is the same rate as
imposed.
• PROGRESSIVE TAX:
• A progressive kind of tax is that
kind of tax which depends
upon the level of income i.e. the
higher it is the more is the tax
and vice-versa.
• In proportional tax the highest
income holder naturally pays
higher income whereas in
progressive tax he will be paying
higher amount of tax.

19. • REGRESSIVE TAX:
• Regressive tax reveals the
fact that with an increase in
the income, tax burden is
reduced and vice-versa.
• Such a tax is cruel in the
sense that the burden is felt
a lot more by the poor than
the rich. Generally a
government would not
impose such a tax but
nevertheless it does happen.