Fi assignment 1.docx - Financial Institution Assignment#1 Submitted by Mariam Fatima Burhan 24727 1 Discuss the bases for classification of financial

Fi assignment 1.docx - Financial Institution Assignment#1...

This preview shows page 1 - 2 out of 3 pages.

Financial Institution Assignment#1 Submitted by: Mariam Fatima Burhan 24727 1. Discuss the bases for classification of financial markets. Explain and justify each basis. Ans. There are five bases for classification of financial markets and are as follows: Nature of financial claim: this consists of fixed claims and variable claims. Fixed claims are a debt market instrument which means their claim in the assets of the entity is restricted to a certain amount whereas variable claims are part of equity market meaning, whatever is left in the business after paying off the fixed liabilities belongs to the shareholders. Maturity of financial claims: is based on either within a year or beyond one year. Within a year of maturity of claim belongs to money market where the investors who intend to invest for not longer than a year enter into a transaction and this market deals with monetary assets like T-bills, commercial paper etc whereas beyond a year maturity of claims is an instrument for capital market where the maximum interchange of money happens and it helps companies get access to money through equity capital, preference share capital and provides them access to invest in the equity share capital of the company . Seasoning of financial claims: includes new claims and old and outstanding claims. New claims are offered by primary markets where the securities are launched for the first time. This market
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read all 3 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture