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1.Global Financial Markets & Participants Overview (

1.Global Financial Markets & Participants Overview

:checkered_flag:
Learning Outcomes (6)

Process & advantages of intermediation in financial markets

Factors causing financial markets to become interrelated

Pros+Cons of globalisation for a country's economy and financial markets

Interrelationship between participants

Flow of funds

Roles of participants

:key:

Key Concepts (7)

Participant Types (7)

capital raisers and investors

borrowers and lenders

regulators (incl. govt) (2)

Australia (4):

International (4)

market institutions & and self-regulatory bodies

Industry/Professional bodies

Service Providers

Financial intermediaries and dealers

Financial assets

Securities

Direct investment

Intermediation

Liquidity

Globalisation

content :book:

recommended reading (not required)
9781743079959
(expensive...)

:book:
Manual

Overview of Market Participants

The flow of funds in a financial system

Main functions of the financial system (4)

4

1

3

2

Flow of Funds

Key Fin Instruments

Money uses:

store wealth

measure value of other things

medium of exchange

...& apparently... 'defer payments'? or something along those lines as per the book answers...

Financial Asset examples (4)

Cash

bank account

govt bond

shares

liquid asset examples (5)

legal tender (notes/coins)

EFT

credit/debit/smart cards

internet banking

cheques

Securities

Documentary evidence of ownership of financial assets

Exchangeable in the marketplace

"For the purposes of this subject, securities are defined as
the paper right to a generally tradeable financial asset."

sectors of the economy (5)

Key financial Instruments

Money

Financial Assets

Securities

Financial Markets

Required Features (4)

freely available information about the product being offered

opportunities to buy and sell at a ‘price’

reassurance that payment will be made once the deal is transacted

the highest standards of honesty and integrity by its participants.

Eg's include (6...) #

• cash market
• fixed interest market
• equity market
• foreign exchange market
• commodity market
• derivatives market

Direct Investment

Intermediation

Advantages of intermediation (6)

Risk bearing (5)

Economies of scale

Specialist skills and knowledge

Convenience

Covering of mismatch

Market facilitation

Disadvantages of intermediation (2)

Link between intermediaries and financial markets

Importance of Liquidity

4 Factors:

width

depth

immediacy

resiliency

7 Key Participant Types

1 Borrowers & Lenders

2 Capital Raisers & Investors

3 Goverments

4 Regulators

5

6

7

Intermediaries in Aus

Markets & Eg. Intermediaries in the Aus System (6)

Debt Markets

Long-term debt market

Banks

life insurance companies

friendly societies

specialist brokers and dealers

Short-term money market

money market corporations

banks

brokers

building societies

finance companies

life offices

trusts

credit unions

The RBA

Sharemarket

Stockbrokers

online brokers

Pooled investment markets

Pension funds

unit trusts

insurance companies

property trusts

friendly societies

retail and wholesale superannuation funds

Foreign exchange market

Banks

specialist dealers

other RBA-approved foreign exchange dealers

Derivatives markets

Futures dealers

stockbrokers

banks

The government as an intermediary

Fund raiser

Taxation

Issues bonds & treasure notes

Govt loans/borrowings from overseas

Exercises economic policy through (2)

Fiscal policy
(eg. Federal Budget)

Monetary policy
(eg. RBA’s open market operations)

The RBA

Banks and other ADIs

ADI examples (3)

Credit unions

Banks
(key functions 3)

Deposits

Lending

Retail lending

Business or commercial

Corporate lending

Payments

Building societies

ADI Services (13)

Money market corporations

Finance companies

Friendly societies

Superannuation funds

Life insurance companies

General insurance companies

Stockbrokers

Fund managers and portfolio managers

Financial advisers

Do intermediaries drive the flow of funds?

Overview of Global Fin Markets

Major Financial Centres

Emerging Markets

Aus Place in Global Fin Markets

Importance of Fin Serv to Aus

Australia’s markets in a regional context

Australia’s funds management industry
(Bangin!)

Australia and the Asian region

Globalisation of Fin Markets

Factors driving globalisation

Technology, allowing superior access to...

improved returns & diversification via superior

a carry trade

arbitrage

currency exchange

Diversified and reduced funding costs

Global market indexes

Implications of globalisation

advantages

disadvantages

Challenges for governments and regulators

Australian Perspective

Briefs

China country brief

China country brief

Bilateral relations

Trade and Investment

People-to-people links

High-level visits and meetings

India country brief

Overview

Political overview

Foreign relations

Relations with other key countries

Economic overview

Bilateral relationship

Bilateral economic relationship

Relations with other key countries

Required reading

A modern financial system: an overview

Learning Outcomes

Effects & consequences of a financial crisis on fin system & real economy

functions of modern fin system
catagorise main types of fin institutions (incl depository fin inst., inv banks, contractual savings intit., finance companies & unit trusts)

Define 4 main classes of fin instruments

Content

Financial Crises & real economy

Financial system & institutions

Overseers

Central bank/s

Prudential Supervisors

Financial System

Financial Instruments

Factors

Return / yield

risk

liquidity

time-pattern of cash flows

Categories

Equity

Debt

Derivatives

5 Financial Institution
categories

Depository financial institutions

Invesment Banks

Contractual Savings Institutions

Finance Companies & General Financiers

Unit Trusts

Financial Markets

Financial instruments

Fin Markets

Flow of funds, market relationships & stabilty

Globalisation of the financial markets

:!:
Apply your knowledge

A

Other than acting as a medium of exchange, name three (3) other functions of money.

Store wealth
(1.3)

unit against which to value other goods

Method to measure the economy?

Distinguish between direct financing and intermediation.

Direct: When the needs of lender/borrower or buy/seller are perfectly matched.
1.5 Tends to be more efficient at large scale hence big corp is the main utiliser

Indirect: When the needs aren't perfectly matched but there is a mediator who is willing to facility more desirable terms (at a cost) - most people/households etc. use this/are here.

Are all financial intermediaries actively engaged in providing financial services to all sectors of the economy? Explain your answer.

No...

What do you understand by the term ‘circular flow of income and expenditure’?

[try again]

B

Which financial centre has traditionally been, and still is, the largest and most
influential market in the world and why?

Explain why many countries (including Australia) wish to become financial centres.

Why is the growth of Australia’s managed funds pool a key element in its future as a regional centre?

What are the factors that are causing India to become a financial centre of increased influence?

What challenges does Australia face in maintaining its relevance as an international financial centre?

List some of the factors impacting on the development of global financial markets.

C

Why has Australia's economy and banking system shown greater resilience to the global financial crisis than countries such as the US and the UK?

Subject learning outcomes (2)

1.Explore the role of intermediaries in financial markets.

2.Explain the impact of current issues and key economic and financial indicators on the Australian and global financial markets.

Alternative learning outcomes...

Financial Intermediaries

Governments

Overseas Sector

Savings

Tax

Imports

Investment

Govt Expenditure

Exports

Labour/Services

Salary/Income

Receipts on goods

goods/services

Household

When done, it might be worth listing ALL of the headings from the manual and ticking them off as I provide answers that I then feel are sufficiently aligned with the answers in the book...?...
PERHAPS?!
The other 3 sections should be covered in prep for the assignment, but when it comes to study time, that's when I dig into here??

Businesses

can kaplan point to where THEIR answer is taught in the content?? #