Concept of Financial Markets

These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this, there is another market in which unsecured and short-term debt instruments are actively traded every day. These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.

1) Name the function being performed by the market in the above case.

2) Also. explain briefly three other functions performed by this market.

State the functions performed by financial market.

Write a word or a term or a phrase which can substitute the following statement :

A definite promise in writing from a buyer for paying the amount on a specific Date.

______ is short-term finance repayable on demand, with a maturity period of one day to fifteen days. 

Helpequip Ltd. is a company dealing in distribution of medical equipments. The company recently imported 500 units of a diabetes monitoring machine which tests the sugar levels without taking blood samples. For deciding the marketing strategy, the Chief Executive Officer of the company called a meeting of the marketing heads of different zones. In the meeting, Sanjeev, the North Zone marketing head suggested that they need to visit hospitals to explain personally to the hospital staff who would be using the machine since the machine is sophisticated. He also suggested that additional staff may also be recruited for the same.

Rishu, another zonal head, was of this opinion that since a large amount of money had been spent on the purchase of the machines, additional funds were not available for recruiting the personnel as suggested by Sanjeev.

Ankur, a newly appointed zonal head of South Zone, suggested that since the size of the
order was not large, a detailed study of the factors determining the choice of channels of distribution was required before making the right choice.

1) Identify the factors influencing the choice of channels of distribution which were discussed in the meeting.

2) Also, explain the other considerations to be taken care of in each factor identified in part (a).

Vansh Limited is a large and reputed company which manufactures ventilators. After the outbreak of ‘COVID-19’ in 2020 the company witnessed an increase in revenue by 40%. It has plans to further increase its production capacity and also start production of PPE kits, sanitisers and masks in 2022. The Finance manager of the Company Mr. Rajiv feels confident about the future of the company and its liquidity position. Discuss the meaning of Dividend Decision and in the light of the above statement explain any two factors which should be considered by ‘Vansh Limited’ while formulating the dividend policy of the company.

What is meant by the financial market?

Money market is a market for lending and borrowing of funds for _________ term.