Finance is the study of money

, , its nature creation

, behaviour regulation and
administration
System stands for a set of
bodily organs
All activities dealing in
finance are organized in a
system known as the financial
system
Financial markets is the institutional
arrangements for dealing in financial
assets and credit instruments of different
, , , types like currency cheques bills etc
: Functions
& & Creation allocation of credit
equity
Mobilization of savings
Cater to various credit needs
Assist balanced economic growth
The financial market is divided into
two categories based on the credit
requirement for short term or long
term purposes
Money Market Short term funds
Capital Market Long term funds
Money market is the collective
name given to the various firms
and institutions that deal in
various grades of near money

- Crowther
Loans for less than a year
Credit instruments are called
near money assets
M!"# MA$%"T
: Components of Money Market
Call money market
Collateral loan
Acceptance market
&ill market
: Call money market
Loan disbursed by commercial banks
' day ( days
&ank can recall the loan at its
maturity
& )sually advanced to bill brokers
. stock e*change brokers
: Collateral loan market
- Lender Commercial banks
- &orrower Stock brokers
- Short term Few months
, , &ack up Securities bonds
stocks
+f the loan is not paid the bonds
or securities become the property of
the lender
: Acceptance market
A draft drawn by an individual or a
& firm upon a bank accepted by the
bank whereby it is ordered to pay to
the bearer a sum of money at a
. specified time in future

- . . $aymond , %ent
,rimarily used in international
trade
&ank merely adds a guarantee to
the draft
+ts importance has declined now
: &ill market
&ills of "*change
-ritten
unconditional order
which is signed by the
& drawer the drawee to
pay on demand or at a
fi*ed time in the
future a definite sum
of money
)sually used by
traders
,opular in the
-est especially London
: Treasury bills
.overnment ,aper Securities
/uration of 0' days
,romissory note of the
government to pay a specified sum
after a specified period
/ Significance Functions of
Money market
"conomic development
,rofitable +nvestment
+mportance for Central &ank
Mobilization of funds
- Self sufficiency of Commercial
&anks
& Savings investment
/efects of +ndian Money
: market
)norganized money market
/isparity in interest rates
Seasonal diversity of the
market
Lack of a proper bill market
Lack of a well organized
&anking system
: Capital market
An organized mechanism for
& effective efficient transfer of
financial resources from the investing
parties engaged in industry or commerce in
the business either be it public or
. private sectors of the economy
: Functions
Mobilization of funds
Securing foreign capital
,romote balanced regional development
Components of Capital
market
,rimary market
Secondary market
: ,rimary market
!ew issue market
& !ew shares bonds that have never
been issued
Facilitates transfer of funds from
willing investors to the
- entrepreneurs to set up new
enterprises
The sentiment of the stock market
influences the primary market
: +nstruments
"quity shares
,reference shares
/eferred shares
/ebentures
STC% MA$%"T
Stock e*changes are
privately organized markets which are used
to facilitate trading in securities
-
& 1usband /ockeray
: Functions
"nsure liquidity of capital
Market for securities
Mobilize surplus savings
$aising new capital
Listing securities
,rocedure for dealing at stock
e*changes
Selection of &roker
,lacing an order
Making a contract
Contact !ote
Settlement note
- : ,$" $"2)+S+T"S T &)# A S1A$"
$egister with a stock
. broker
. A ,A! card holder
. pen a demat account
: $".+ST"$+!. AS A CL+"!T
Filing a client
. registration form
Sign the member
. constituent agreement
: STA."S F T$A!SACT+!
,lace an order
"*ecution
$eporting the deal
Settlement of
transaction
rder confirmation
slip
Trade confirmation
slip
Control note slip
/ ,urchase Sale note
: /C)M"!TS
&AS+S T &)# S1A$"S F A ,A$T+C)LA$ F+$M
. ,roduct manufactured
. /emand
. Amount of dividend
. $anking of the company
. Change in prices
$eputation of the
. company
: T#,"S F S,"C)LAT$S
&ull
&ear
Stag
Lame /uck
Factors influencing prices
: on stock e*change
Financial position of the
firm
& /emand Supply position
Lending rates
Trade cycle
Speculation activities
.overnment control
: Stock "*changes in +ndia
& !ative Stock Share &rokers
Association
34 recognised Stock "*changes
in +ndia
&ombay Stock "*change
!ational Stock "*change
ver the Counter "*change of
+ndia