Financial markets-securities and financial intermediaries, Finance Basics

Assignment Help:

Describe the structure of financial systems with financial markets, securities and financial intermediaries.

By a structural point of view a financial system can be considered in terms of the entities which compose the system. A financial system includes financial markets, financial intermediaries and securities.

Financial markets are markets wherein funds are moved by people who have an excess of accessible funds and have lack of investment opportunities to people who have investment opportunities and have lack of funds. It also has directly effects onto personal wealth and the behaviours of consumers and businesses. Thus, they contribute to increase the production and the efficiency into the overall economy. Financial markets as like bond and stock markets are markets wherein securities are traded.

121_Structure of financial systems.png

Structure of financial systems

Securities also termed as financial instruments are financial claims onto the issuer’s future assets or income. They represent financial liabilities for the individual or firm who sells them as borrower or issuer of the financial claim into return for money and financial resources for the buyer as lender or investor into the financial claim. From definition, hence, the sum of financial assets into existence will precisely equal the sum of liabilities.

Governments and corporations increase funds to finance their activities by giving equity instruments (shares, identified in the USA as stocks) and debt instruments (bonds). Bonds are securities which promise to make periodic payments of a sum of money for a given period of time. Stocks are securities which represent a share of ownership into the firm.

Financial intermediaries are economic agents who specialise within the activities of selling and buying (at similar time) financial contracts (loans and deposits) and securities (stocks and bonds). Remember that financial securities are simply marketable, whereas financial contracts cannot be simply sold (marketed). Banks by the largest financial institution into our economy that they accept deposits (loans from individuals or firms to banks) and create loans (sums of money lent by banks to ones or firms): thus, they borrow deposits through people who have saved and into turn make loans to the others. In present years, other financial intermediaries, as like mutual funds, pension funds, investment banks and insurance companies, have been growing at the expense of banks.

Related Discussions:- Financial markets-securities and financial intermediaries

Factors that influence the cost of finance, Factors that Influence the Cost...

Factors that Influence the Cost of Finance 1. Terms of reference - if short term, the cost is generally low and vice versa. 2. Economic conditions prevailing - If a com

Matching approach - financing current assets, Matching Approach - Financing...

Matching Approach - Financing Current Assets This approach is further referred to as the hedging approach. Beneath this approach, the firm adopts a financial plan that involve

Non-linear Break Even Analysis, International Data Systems information on r...

International Data Systems information on revenue and costs is only relevant up to a sales volume of 100,000 units. After 100,000 units, the market becomes saturated and the price

Cost of debentures, Do you guys provide Cost of Debentures assignment help....

Do you guys provide Cost of Debentures assignment help. I need writing a report on Cost of Debentures and it is about 2000 words. Let me know. I need to buy your solution.

Agency relationship between auditors and shareholders, Agency Relationship ...

Agency Relationship between Auditors and Shareholders Shareholders appoint auditors as per the provisions of Section 159(1)-(6) of the Companies Act. The auditors are believed

Advantagesand Disadvantages of IRR, Advantagesand Disadvantages of IRR ...

Advantagesand Disadvantages of IRR Advantages of IRR It seems time value of money It seems cash flows over the whole life of the project. It is compatible along

#titleMrs.., You own a two-bond portfolio. Each has a par value of $1,000. ...

You own a two-bond portfolio. Each has a par value of $1,000. Bond A matures in five years, has a coupon rate of 8 percent, and has an annual yield to maturity of 9.20 percent. Bon

Write Your Message!

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd