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FINANCIAL MARKETof Bangladesh

FINANCIAL MARKETof Bangladesh

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Prepared by :Prepared by : Name: Hafez Ahammed SumonName: Hafez Ahammed Sumon

ID: 13102029 (01836005696)ID: 13102029 (01836005696)

Section: cSection: c

Program: BBAProgram: BBA

Prepared for :Prepared for :

FacFaculty : Sekih Ali Zulfikarulty : Sekih Ali Zulfikar

Faculty of Finance (IUBAT)Faculty of Finance (IUBAT)

College of Business Administration-CBA.College of Business Administration-CBA.

FIN – 403(Management Financial Institutions )FIN – 403(Management Financial Institutions )

COMPANYLOGOContents

Financial market (Introduction)1

Relationship Between Lenders & Borrowers2

Capital Market3

Money Market4

Differences Between Capital & Money Market5

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Foreign Exchange & Repo Market6

COMPANYLOGOFinancial Market

Any marketplace where buyers and sellers participate in the trade of financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods.

There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded).

In finance, financial markets facilitate: The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) Price discovery Global transactions with integration of financial markets The transfer of liquidity (in the money markets) International trade (in the currency markets)

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COMPANYLOGOSecurities

Typically a borrower issues a receipt to the lender promising to pay Typically a borrower issues a receipt to the lender promising to pay

back the capital. These receipts are securities which may be freely back the capital. These receipts are securities which may be freely

bought or sold. In return for lending money to the borrower, the bought or sold. In return for lending money to the borrower, the

lender will expect some compensation in the form of interest or lender will expect some compensation in the form of interest or

dividends. This return on investment is a necessary part of markets dividends. This return on investment is a necessary part of markets

to ensure that funds are supplied to them.to ensure that funds are supplied to them.6

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Relationship Between Lenders and Borrowers

Lenders FinancialIntermediary

FinancialMarkets

Borrowers

•Individual

•Companies

•Banks

•Insurance Companies

•Pension Funds

•Mutual Funds

•Interbank

•Stock•Exchange

•Money Market

•Bond Market

•Foreign Exchange

•Individuals

•Companies

•Central Government

•Municipalities

•Public Corporations

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COMPANYLOGOFinancial Market Chart

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COMPANYLOGO Diagram

CAPITALMARKET

FINANCIALMARKET

MONEYMARKET

Foreign Exchange

market

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Generally a market in which individuals and institutions trade financial

securities. Organizations/institutions in the public and private sectors also often

sell securities on the capital markets in order to raise funds.

Or, Capital market is a market for financial assets which have a long or

indefinite maturity. Unlike money market instruments the capital market

instruments become mature for the period above one year.

The Capital Market of Bangladesh consists of two part. They are-

1.Primary Market: The Primary Market is a place where new shares and bonds are offered.2.Secondary Market: Secondary market is a place where existing shares and debentures are treaded.

Capital Mark

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Structure of Capital Market:

COMPANYLOGOInstrument of Capital Market

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STOCKSThe market in which shares are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market.

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BONDSThe environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities.

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DEBENTURESA certificate issued by a corporation with the purpose of creating a debt. Debentures are generally unsecured by assets and are interest bearing securities.

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TREASURY BILLSA short-term obligation that is not interest-bearing (it is purchased at a discount); can be traded on a discount basis for 91 days

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FOREIGN EXCHANGEThe market in which participants are able to buy, sell, exchange and speculate on currencies.

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FIXED DEPOSITS FDs are the deposits that are repayable on fixed maturity date along with the principal and agreed interest rate for the period.

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COMPANYLOGORole Of Capital Market

1. Mobilization of Savings : Capital market is an important source for mobilizing idle savings from the economy. It mobilizes funds from people for further investments in the productive channels of an economy.

2. Capital Formation : Capital market helps in capital formation. Capital formation is net addition to the existing stock of capital in the economy. 

3. Provision of Investment Avenue : Capital market raises resources for longer periods of time. Thus it provides an investment avenue for people who wish to invest resources for a long period of time. 

4. Speed up Economic Growth and Development : Capital market enhances production and productivity in the national economy by generation of employment and development of infrastructure.

5. Service Provision : As an important financial set up capital market provides various types of services. It includes long term and medium term loans to industry, underwriting services, consultancy services, export finance, etc. These services help the manufacturing sector in a large spectrum.

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COMPANYLOGOMoney Market

The organization for the lending of short-term fund, through the use of such instruments as commercial bills of exchange, short-term government securities and bankers acceptance.

Money Market

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COMPANYLOGOFunctions of Money Market

1. transfer of large sums of money2. transfer from parties with surplus funds to parties with a

deficit.3. allow governments to raise funds4. help to implement monetary policy5. determine short-term interest rates6. Medium to control creation of Credit

Financial institutes of Money Market:

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COMPANYLOGOCharacteristics of a Developed Money Market

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Usefulness of a Developed Money Market:

COMPANYLOGOStructure of Money Market

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Recent innovations in the Money Market: 91 days T- bill, 182 days T- bill,364 days T- bill, 2 years T-bond, 5 years T-bond, 10 years T- bond, And 20 years T-bond.

COMPANYLOGOMoney Market Instruments

Certificates of Deposit Bill rediscounting

Commercial Paper

Inter-bank participation certificates

Treasury Bills

Inter-bank term money

Instruments

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Differences Between Money Market and Capital Market:

1. Maturity Period

2. Credit Instruments

3. Institutions

4. Risk

5. Market Regulation

6. Relation with Central Bank

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Foreign Exchange Market

The foreign exchange market (or currency market) is a global

decentralized market for the trading of currencies. In terms of volume of

trading, it is by far the largest market in the world. The main participants

in this market are the larger international banks.

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The Repo MarketRepo is a money market instrument which helps in collateralized short-term borrowing and lending through sale/purchase operations in debt instrument. Under a repo transaction, securities are sold by their holder to an investor with an agreement to purchase them at a predetermined rate and date.

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Any questions that have raised in your mind?

We present our gratitude to everyone for listening…..

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