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Credit Markets:
The financial system enables supply of funds to support purchase of goods and services and to finance capital investments. In this way, it provides funds both to the demand side (consumers) and the supply side (manufacturer) of the economy. In a well-developed market with adequate infrastructural facilities, transfer of funds takes place directly from the savers of funds to the users of funds. Thus, the transfer takes place either through the disintermediation or the reintermediation processes.
When the market allows direct flow of funds, it is known to be in disintermediation stage. Such direct flow of funds will be made by the issue of financial assets in the form of securities. Differentiating itself slightly from the disintermediation process is the reintermediation process, where the funds flow to an intermediary which invests in the securities issued by the corporates. For instance, individuals invest in mutual funds, which in turn invest in the securities issued by the corporates.
However, in economies where there is no adequate infrastructural support for such direct flow of funds to take place, they generally operate through the intermediation process. Operating in an intermediation stage to fulfill the credit requirements of the different sectors of the economy is the Credit Market. Intermediaries like banks, financial institutions and Non-banking Finance Companies (NBFCs) provide credit for the varying requirements of the consumer and corporate sectors of the economy. This credit extension will mostly be in the form of loans.
Project Evaluation The expected value calculations are crucial to project investment decisions. The following example explains the use of probabilities in project evaluation.
a) Product portfolio refers to the diversity of the different product lines produced by a business. In this case, Mattel's product portfolio includes: board games, toy cars, cuddly
To look into the feasibility of a new production system, K-Pad, the largest P.C. producer in the region, has spent $88,000 on the technical feasibility study. In view of the favora
A bond whose payments are made in foreign currency has unknown cash flows in domestic currency. This is because the cash flows are dependent on the exchange rate
1. A company sold a super computer to an Institute in Germany on credit and invoiced DM 10 million payable in six months. Presently, the six-month forward exchange rate is $1.50/DM
PLAYERS IN THE PRIMARY MARKET Some important players in the primary market are: Merchant Bankers When a company approaches the public for funds, merchant bankers manage
what business organization do you preffer ? service concern,trading concern or manufacturing concern
A legal claim on exact assets which were used to make loan secure.
Presently, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The three-month interest rate is 8.0% per year in the U.S. and 5.8% per year in t
How to calculate payment of expenses: SAIB, LLC is a US company that provides cell phone and internet service; it seeks to expand its international operations into Kyrgyzstan.
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