MFPS
MFPS
MFPS
INTRODUCTION
• Financial markets, from the name itself, are a type of marketplace that provides an
avenue for the sale and purchase of assets such as bonds, stocks, foreign exchange,
and derivatives.
• Often, they are called by different names, including “Dalal Street” or “Wall Street”
but all of them still mean one and the same thing.
• Simply put, businesses and investors can go to financial markets to raise money to
grow their business and to make more money, respectively.
• A large variety of financial institutions has come into existence over the years to
perform a variety of financial activities.
FINANCIAL INSTITUTIONS
• While some of them operate at all-India level, others are state level institutions.
• Besides providing direct loans (including rupee loans, foreign currency loans),
financial institutions also extend financial assistance by way of underwriting
and direct subscription and by issuing guarantees.
• A financial market consists of two major segments: (a) Money Market; and (b)
Capital Market. While the money market deals in short-term credit, the capital
market handles the medium term and long-term credit.
MONEY MARKET
• The money market is a market for short-term funds, which deals in financial assets whose
period of maturity is up to one year.
• Money market does not deal in cash or money as such but simply provides a market for
credit instruments such as bills of exchange, promissory notes, commercial paper, treasury
bills, etc.
• These financial instruments are close substitute of money. These instruments help the
business units, other organizations and the Government to borrow the funds to meet their
short-term requirement.
• Money market does not imply to any specific market place. Rather it refers to the whole
networks of financial institutions dealing in short-term funds, which provides an outlet to
lenders and a source of supply for such funds to borrowers.
CAPITAL MARKET
2. Instrument dealt in
3. Participants
4. Regulatory body
FINANCIAL INTERMEDIARIES
• The bond market—often called the debt market, fixed-income market, or credit
market—is the collective name given to all trades and issues of debt securities.
• Governments typically issue bonds in order to raise capital to pay down debts
or fund infrastructural improvements.
• Publicly traded companies issue bonds when they need to finance business
expansion projects or maintain ongoing operations.
• The mechanics of buying and selling bonds works similarly to that of stocks or
any other marketable asset, whereby bids are matched with offers.
DIGITAL BANKING
• The term digital banking typically refers to the digitization (or moving online)
of all the traditional banking industries and services that were historically only
accessible in person at a bank branch.
• Consumer preferences quickly shifted to online and mobile devices, but many
financial organizations struggle to adapt their banking experiences to online
channels and to the smaller mobile device screens.
• Unfortunately, banks can no longer afford to wait to invest in digital
transformation because customers are increasingly willing to switch banks for
digital features such as bill pay, mobile payments and loan applications.
LET’S PRACTICE
MCQ….. (1)
9) Which of the following statements about the characteristics of debt and equity are true?
• A) They can both be long-term financial instruments.
• B) They both involve a claim on the issuer’s income.
• C) They both enable a corporation to raise funds.
• D) All of the above
• E) Only (A) and (B) of the above
9) Which of the following statements about the characteristics of debt and equity are true?
• A) They can both be long-term financial instruments.
• B) They both involve a claim on the issuer’s income.
• C) They both enable a corporation to raise funds.
• D) All of the above
• E) Only (A) and (B) of the above
14) An important financial institution that assists in the initial sale of securities in the primary market is the:
• A) investment bank.
• B) commercial bank.
• C) stock exchange.
• D) brokerage house.
MCQ……. ( 7 )
14) An important financial institution that assists in the initial sale of securities in the primary market is the:
• A) investment bank.
• B) commercial bank.
• C) stock exchange.
• D) brokerage house.
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