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FINANCIAL MARKET Financial market is a market for the creation and…
FINANCIAL MARKET
Financial market is a market for the creation and exchange of financial assets.
FUNCTION
Mobilization of savings and channeling them into the most productive uses
Facilitating price discovery
Providing liquidity to financial assets
Reducing the cost of transaction
CAPITAL MARKET
Features
Return may be high
Investment outlay may be low
More than 5 years
Risk is high
Long term debt
Examples
Equity
- provide means of raising funds by corporations by issuing stocks and shares
Bonds
- private and public sectors can raise funds by issuing private & government.
MONEY MARKETS
Features
Short term funds
Up to one year
Risk is low
Return in loow
Liquidity is high
Examples
Treasury bill
Commercial paper
Call money
Certificate of deposit
Commercial bill
FOREIGN EXCHANGE MARKET
Deal with trading one currency for another :
Immediate exchange of currencies
DERIVATIVE
Market in which derivative securities are traded
Instrument that derived its value from the movement of price/rate of some underlying assets such as interest rate,foreign exchange,commodity & index.
Examples
Future & forward contract
Options,swaps
Investors purchase/sell derivatives to
Manage risk associated with the underlying security
Protect against fluctuation value
Profit from periods of inactivity/decline
OFFSHORE
Offshore refers to a location outside of one's national boundaries, whether or not that location is land- or water-based.
The term may be used to describe foreign banks, corporations, investments, and deposits.
Labuan International Offshore Financial Centre formed on Oct 1, 1990
Deals in currencies other than MYR
More than 5000 offshore companies originating from more than 70 countries in Labuan
NURFARISHA BINTI MAHAT
2019452148