Revise Lecture 8 Revise Lecture 8 Q 1

Revise Lecture 8

Revise Lecture 8 Q 1: Topic of lecture 8?

Revise Lecture 8 Ans 1: Money Market and Financial Services

Revise Lecture 8 Q 2: What are the important instruments of Pakistan money market?

Revise Lecture 8 Ans 2: 1. Call / notice money market 2. Inter bank transfer money 3. Treasury bills 4. Certificates of Deposits (CD) 5. Commercial papers

Revise Lecture 8 • What is treasury bill?

Treasury Bill • A negotiable debt obligation issued by the government and backed by its full faith and credit, having a maturity of one year or less Exempt from government and local taxes.

Lecture 9 • Capital Market

Capital Market • The capital market is the market for securities, where companies and government can raise long-term funds. • It is the market in which money is lent for period longer than a year. • The capital market includes the stock market and the bond market

Capital Market The capital markets consists of the; 1. Primary market 2. Secondary market

Capital Market Primary market: • The primary market are where NEW shares and bonds issues are sold (underwriting) to investors. • This is also called initial public offering (IPOs)

Capital Market Secondary market The secondary market are where EXISTING shares are sold and bought from one investor or speculator to another, usually on an exchange. (e. g. London stock exchange, New York stock exchange)

Capital Market Secondary market • In Pakistan, the capital market includes (also known as equity market) • An equity market, which consists of 3 stock exchanges • KSE, LSE, ISE

Capital Market • Functional Responsibilities of Stock Exchanges

Capital Market • The major function of a stock exchange is assisting, regulating and controlling business in buying, selling and dealing in securities. • Obviously, the stock exchange acts as a market for the purchase and sale of listed industrial and financial securities.

Capital Market • Merchant or Investment Banking:

Capital Market Merchant or Investment Banking: • Am Investment bank is a financial institution that raises capital, trade in securities and manages corporate mergers and acquisitions.

Capital Market Merchant or Investment Banking: • Investment banks profit from companies and government by raising money through issuing and selling securities in the capital markets (both equity & bond) and bond markets, as well as providing advance on transactions such as merger and acquistions.

Capital Market The activities of merchant banking are very vast in nature. They include the following; 1. Management of the customers securities 2. Management of underwriting of shares and debentures. 3. Management of the portfolio 4. Management of projects and counseling as well as appraisal 5. Management of the interest and dividend

Capital Market • Names of Investment banks in the world

Capital Market 1. 2. 3. 4. 5. 6. 7. ABN Amro bank Goldman Sachs Morgan Stanley Lehman Brothers Merhill Lynch Bank of Amercia JP Morgan Chase