Introduction to Financial Markets

1 Introduction to Financial Markets1.1 The pecuniary organization ? fiscal institutions, markets and instruments administer by a prudential regulator. Financial system of rules provides sparingal and pecuniary teaching to the markets. An efficient FS absorbs and reflects new information into the toll of financial instruments. To understand the nature of financial markets it is source incumbent to understand the overall financial system that comprises, forget alia, financial markets. The main functions of a nation?s financial system are to facilitate the:transfer of funds from verbosity to famine economic wholes, in primary financial markets, by the foundation of new financial assetstrade of existing financial assets in supplementary financial marketsfacilitate portfolio structuring ? Combination of assets and liabilities each comprising of return, risk, liquidity and quantify of hard cash flows that best suit each deliverer?s contingent needs. A nation?s finan cial system comprises overabundance economic wholes (lenders), deficit economic units (borrowers), financial institutions, financial markets and financial assets. 1.1.1 Surplus economic unitsThese are persons or small groups (eg unmarried households or handicraft firms) who have much funds lendable than they require for immediate expenditure. That is, they render savers and potential lenders of their plain funds. 1.1.2 dearth economic unitsThese are individuals or groups (eg individual households or business firms) who require additional funds to outfit their expenditure plans.

That is, they manufac ture potential borrowers of funds. 1.1.3 Fi! nancial institutionsThese are organisations whose core group business involves the acceptance and lending of funds (financial intermediation) and/or the training of financial operate to other economic units. 1.1.4 Financial assetsFinancial assets represent a aver or right that a surplus economic unit holds over a deficit economic unit. They provide the surplus economic unit with a investment company of value or future consumption or investment. To the deficit economic unit financial assets they have issued represent a liability or obligation. Whenever, funds... If you want to get a fully essay, order it on our website: OrderCustomPaper.com

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