Page 21 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services Manpreet Kaur, Lovely Professional University

Notes Unit 2: Financial Markets

CONTENTS
Objectives
Introduction

2.1 Types of Financial Market
2.2 Capital Market
2.2.1 Primary Capital Market

2.2.2 Secondary Capital Market
2.3 Money Market
2.3.1 Types of Money Market
2.3.2 Money Market Instruments
2.4 Summary

2.5 Keywords
2.6 Self Assessment
2.7 Review Questions

2.8 Further Readings
Objectives

After studying this unit, you will be able to:
State the types of financial market
Define capital market
Explain primary capital market and secondary capital market

Define money market
State the types of money market
Define call money, treasury bills, certificates of deposits and commercial papers

Introduction

Financial Market is the interface between a large number of buyers and sellers of the financial
products. The prices of the products are fixed by the market forces of demand and supply within
the market itself.
The financial market promotes the savings of the economy, providing an effective channel for
transmitting the financial policies. Technically speaking, a financial market facilitates:

1. Raising of capital (in the capital markets);
2. Transfer of risk (in the derivatives markets);
3. International trade (in the currency markets).

16 LOVELY PROFESSIONAL UNIVERSITY