Professional Documents
Culture Documents
Money Market
Capital Market
Primary Market
Secondary Market
MONEY
MARKET:-
In finance, the money market is the global financial market for short- 4
term borrowing and lending. It provides short-term liquidity funding
for the global financial system. The money market is where short-
term obligations such as Treasury bills, commercial paper and
bankers‘ acceptances are bought and sold.
Capital Market -- The market for relatively long-term (greater than
one year original maturity) financial instruments.
Types- -
Shares, Bonds/TFCs
Types of Capital Markets
Primary Market -- A market where shares or TFCs are
bought and sold for the first time (a “new issues” market).
Secondary Market- “Secondary markets are those where
already issued shares are bought and sold”
WHAT IS STOCK EXCHANGE? 5
Specialists
Floor Brokers
Stockbrokers/Financial
Advisers
Day Traders
Casual Traders
Online Trading
FACTORS AFFECTING STOCK EXCHANGE 11
Economic Factors
Inflation And Deflation
Interest Rates
Foreign Markets
Market Factor
Demand AND SUPPLY
Market Cap
News
Earning/Price Ratio
FEATURES OF STOCK
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MARKET
Opportunities & Better returns
Pronounced risk factor
Speculation, rumours and news orientation
Diverse type of participants
Connectivity with other financial markets
Dependence on commodity move
Fiscal, monitory and taxation policy effects
Sector performance and incentives by government
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ADVANTAGES OF STOCK EXCHANGE
13
giving access to new capital to develop the business
making it easier for you and other investors - including venture
capitalists - to realise their investment
allowing you to offer employees extra incentives by granting
share options - this can encourage and motivate your
employees to work towards long-term goals
placing a value on your business
increasing your public profile, and providing reassurance to
your customers and suppliers
allowing you to do business - eg acquisitions - by using
quoted shares as currency
creating a market for the company's shares
DISADVANTAGES OF STOCK EXCHANGE
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Market fluctuations - your business may become vulnerable to market
fluctuations beyond your control - including market sentiment, economic
conditions or developments in your sector.
Cost - the costs of flotation can be substantial and there are also ongoing
costs of being a public company, such as higher professional fees.
Responsibilities to shareholders - in return for their capital, you will have to
consider shareholders' interests when running the company - which may differ
from your own objectives.
The need for transparancy - public companies must comply with a wide
range of additional regulatory requirements and meet accepted standards of
corporate governance including transparancy, and needing to make
announcements about new developments.
Demands on the management team - managers could be distracted from
running the business during the flotation process and through needing to deal
with investors afterwards.
Investor relations - to maximise the benefits of being a public company and
attract further investor interest in shares, you will need to keep investors
informed.
MAJOR PARTICIPANTS: BUYER AND SELLER 15
The Government
WHY STOCK PRICE MOVES UP OR DOWN
COMPANY DOING GOOD OR BAD BUSINESS
Better management
Day Order
Order only valid for the day when it is given
Week Order
Order only valid for the week when it is given
Month Order
Order only valid for the month when it is given
TYPES OF 23
ORDERS
Fill or Kill Order
The order to be filled immediately or is considered cancel
Good till Canceled Order
The order that stands valid until it is cancelled
LIMIT ORDER 24
Condition
Limit
Price below the limit Price above the limit
He is speculator who expects the future raise in price of securities he buys the securities to
sell them at future date at the higher price.
He is called as bull because his activities resembles as a bull , as the bull tends to throw its
victims up in the air through its horns. In simple the bull speculator tries to raise the price
of securities by placing a big purchase orders.
BEAR 29
{MANDIWALA}
He is speculator who expects future
fall in prices , he does an
agreement to sell securities at
future date at the present market
rate .
He is called as bear because his
altitude resembles with bear , as the
bear tends to stamp its victims down
to earth through its paws . In simple
the bear speculator forces of prices
of securities to fall through his
activities.
STAG 30
{DEER}
He operates in new issue of
market . He is just like a bull
speculator . He applies large
number of shares in the issue
market only by paying ,
application money , allotment
money. He is not a genuine
investor because , he sells the
alloted securities at the premium
and makes profit. In simple he is
cautious in his dealings . He
creates an artificial rise in prices
of new shares and makes profits.
LAME 31
DUCK
He is speculator when the bear operator finds it
difficult to deliver the securities to the consumer
on a particular day as agreed upon , he
struggles as a lame duck in fullfilling his
commitment . This happens when the prices do
not fall as expected by the bear and the other
party is not willing to postpone the settlement
to the next period.
PAKISTAN’S STOCK EXCHANGES
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The Karachi Stock Exchange (KSE) was established on 18th
September, 1947. It was later converted and registered as a
Company Limited by Guarantee on 10th March, 1949. the oldest
stock market of Pakistan.
Lahore Stock Exchange (Guarantee) Limited came into existence in
October 1970, under the Securities and Exchange Ordinance,
1969, of the Government of Pakistan in response to the needs of
the Provincial metropolis of the Punjab.
The Islamabad Stock Exchange (ISE) was incorporated as a
guarantee limited Company on 25th October, 1989 in Islamabad
Capital territory of Pakistan with the main object of setting up of a
trading and settlement infrastructure, information system, skilled
resources, accessibility and a fair and orderly market place that
ranks with the best in the world.
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