Financial Market

FINANCIAL MARKET
Financial market is a link between surplus and deficit units or in
other words financial market brings together lenders and
borrowers.
There are two major segments of financial market:
1. Capital Market
2. Money Market

Functions of Financial Markets
1. Mobilisation of savings and channelizing them into the
most productive uses.
2. Facilitate price discovery.
3. Provide liquidity to financing assets.
4. Reduce the cost of transaction.

Money market
It is the market of short term funds that means funds for a
period of up to one year only. It is considered as a market for
providing working capital.

Instrument of Money Market
1. Treasury Bill.
2. Call Money.
3. Commercial Paper.
4. Commercial Bill.

Capital Market
It is the market for long and medium term funds. It refers to
the organisations institutions which provide funds for more than
one year time period.

Nature or Features of capital market:
1. Link between savers and investment opportunities.
2. Deals in long-term investment.
3. Utilises intermediaries