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
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- Spring '20
- Economics, Financial Markets, Stock exchange, classification of financial markets
