Essay regarding Overview of Economical Markets, Corporations and Funds

Review of Financial Marketplaces, Institutions and Money

п»їFIN 111 ADDRESS WEEK 2

Overview of monetary markets, organizations and cash

1 . Explain the position of the financial system and so why it is important to many of these and to our economy as a whole The financial system is composed;

i) Economic markets (markets for buying and selling economic instruments) Market bourse and capital market

Primary and secondary market

Creation of Financial resources (shares, bills, notes)

Trading of financial property

ii) Banks

Banks, financial institutions, credit unions

Invest in monetary assets (loans, shares, properties)

Provide finance

iii) Cash

Act as medium of exchange, represent your local store of wealth

The part of the financial system is to gather money from SSUs and transfer that to DSUs in the most efficient way possible The bigger the flow the more efficiently the funds are allotted, the greater is the accommodation of individual preferences and readiness of business owners to invest in companies Financial markets have five functions;

1) To aid the circulation of funds (From lenders to borrowers) 2) To supply the system to settle orders (through payment processing system; BPAY or ATM) 3) To generate and disseminate information (Market discharge announcements about firms earning) 4) To provide the ways to transfer and manage risk (Insurance goods, securitization) 5) To provide techniques for dealing with incentive problems (information asymmetry: constant disclosure regulation)

Features of the financial system

Cash is aggregated in small amounts and borrowed in huge amounts Competitive: competition amongst banking institutions will increase the deposit rates (saving) and press down the financing rates (lending) Bank's earnings comes from the interest rate differential (Spread) between the depositors Financial instruments: given by a get together raising funds, acknowledging a financial commitment and entitling the buyer to specified future cash flows Dual coincidence of wants happy: a purchase between two parties that meets...