Gujarat BoardEnglish MediumSTD 12 CommerceOCMFINANCIAL MARKET5 Marks
Question
Explain the concept of Financial Market.
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Answer
Introduction :
Growth and development of financial market is required to satisfy the need arising for long term and short term capital in business unit.
Since ancient times in our country landlords and money lenders provides finance in urban and rural areas.
There is no regulatory institution or norms to control them.
As a result borrower is exploited.
As a result, organized market, following certain to control them.
As a result borrower is exploited.
As result, organized market, following certain established norms and rules have developed.
This organized sector has played vital role in the economic development of the nation and to fulfill the need for long term and short term capital of industrial unit.
Concept of Financial Market :
Financial market is an important component of the financial structure.
Investors take their own decisions regarding where and when to invest their saving.
Investors consider the attitude and move of the market and invest wisely.
Large scale trading is carried out in this market.
Participants in Financial Market :
Following are the participants in financial market.
Borrowers means raising fund by issuing various securities.
Divisions of Financial Market :
Financial market is mainly divided into two part.
Its sub-divisions are as mentioned below.
Capital Market : Capital market is the market of long term securities. E.g. share, debenture, bond etc.
Money Market: Money market is the market of short term securities. E.g. Treasury Bill, commercial paper etc.
Primary Market: Primary market is the market of new securities issued by the company.
Secondary Market: Secondary market is the market in which existing securities previously issued are traded.
Conclusion :
Various divisions of financial market indicate the need of business unit for long term and short term capital through various instruments.
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