User talk:Nehachhabra

Financial Market
Definition Financial Market is a link between the savers and the borrowers. This market transfers the money or capital from those who have surplus money to those who are in need of investment. Generally the investors are called surplus units and business enterprises are called deficit units. So financial market transfers money supply from surplus units to deficit units. Financial market acts as a link between surplus and deficit units and bring together the borrower and lenders. There are mainly two ways through which funds can be allocated : [a] Via bank [b] Financial Market The household who are the surplus units may keep their savings in banks, they may buy securities from capital market. The banks and Financial market both in turn lend their funds to business firm which is called deficit unit. Bank and financial market are competitor of each other. Financial market is the market for the creation and exchange of financial assets.

Classification  1. Capital Market 2. Money Market

1. Capital Market:- It is a market for medium and long term funds. It includes all the organisations, institutions and instruments that provide long term and medium term funds. It does not include the instruments or institutions which provide finance for short period(upto 1 year). The common instruments used in capital market are shares, debentures, bonds, mutual funds, public deposits etc.

Definition of Capital Market ''Capital Market can be defined as a mechanism which channelises savings into investment or productive use. It allocates the Capital resources amongest alternative uses. It intermediates flow of savings of those who save apart of their income from those who want to invest it in productive assets.'' by V.K. Bhalla

2. Money Market:- It is a market for short term funds ment for use for a period of upto one year. January money market is the source of finance for working capital. Transactions of money market include lending and borrowing of cash for a short period of time and also sale and purchase of securities having one year term or which gets reedemed (paid back) within one year period. Money market is not a fixed geographical area but it constitutes all organisations and institutions which deal with short term debts. The common institutes are Reserve Bank of India, State Bank of India, Other commercial Banks, LIC, GIC, UTI etc. Many of these institutions deal on telephone and fax only.

Definition of Money Market ''The total stock of money circulating in an economy is the money supply. The circulating money involves the currency, printed notes, money in the deposit accounts and in the form of other liquid assets.''