Why Study Money, Banking, and Financial Markets?. Chapter 1 By: Madam Maira Zaib. www.IMSciences.net. Why Study Money, Banking, and Financial Markets. To examine the role of money in the economy To examine how financial institutions such as banks and insurance companies work
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By: Madam Maira Zaib
such as banks and insurance
such as bond, stock and foreign
exchange markets work
Financial Systemis the group of individuals, intermediaries and institutions that can potentially interact or participate in transactions that involve real or financial assets.
The Financial System provides the environment in which the individual investors and companies operate.
Financial system participants:
– Financial institutions, private and public organizations.
– Deposit takers.
– Non-deposit takers
Financial markets (FMs) are organized and highly regulated mechanisms that facilitate the transactions between investors and companies or other market participants that act as investors or intermediaries.
claim on the issuer’s future income
to make payments periodically for a
specified period of time
or the price paid for the rental of fund
• The foreign exchange market is where
funds are converted from one currency
• The foreign exchange rate is the
price of one currency in terms of
• The foreign exchange market
determines the foreign exchange rate
• Financial Intermediaries—institutions that borrow funds from people who have saved and make loans to other people
• Banks—institutions that accept deposits and make loans
• Other Financial Institutions—insurance companies, finance companies, pension funds, mutual funds and investment banks
• Financial Innovation—in particular, the advent of the information age and e-finance