Introduction to Financial Markets

1 Introduction to Financial Markets1.1 The pecuniary organization ? fiscal institutions, markets and instruments administer by a prudential regulator. Financial transcription provides economicalal and monetary instruction 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 commencement incumbent to understand the overall financial system that comprises, put down 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 clock of hard cash flows that best suit each saviour?s contingent needs. A nation?s financial 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 separate households or handicraft firms) who have to a greater extent funds lendable than they require for immediate expenditure. That is, they render savers and capableness lenders of their otiose funds. 1.1.2 dearth economic unitsThese are individuals or groups (eg individual households or business firms) who require additional funds to escort their expenditure plans.

T hat is, they fend for potential borrowers o! f funds. 1.1.3 Financial institutionsThese are organisations whose encumbrance business involves the acceptance and lending of funds (financial intermediation) and/or the homework 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 retentivity 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 exuberant essay, order it on our website: OrderCustomPaper.com

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