Types of financial markets and Their Roles Presented by sadam hussain indhar in iqra university in the class of Finance For Managers

1. Submitted To:
Sir Muhammad Naveed Alam
Name of Group
members
Registration Number
Sadam Hussain 35867
Fayyaz Ahmed 33732
Shehreyar 34286
Haider Ali Sarmast 38289
Types of Financial Markets and Their Roles and A short Note
on Valuation of Stock

2. Types of Financial Markets and their Roles
Financial market:
It refers to a marketplace, where creation and trading of financial assets, such
as shares, debentures, bonds, derivatives, currencies, etc. take place. It plays a
crucial role in allocating limited resources, in the country’s economy
The Major Players in Financial Markets
Brokers:
A broker is a commissioned agent of a buyer or sellers
Dealers:
Dealers make profits by buying assets at relatively low prices and
reselling them at relatively high prices (buy low - sell high).
Investment Banks:
Investment Bank provide financial Services such as
(IPO, FPO, Underwriting,)
Financial Intermediaries:
It’s the middle man between two parties like firms or individual
in financial transaction. Such as investment bank or Estate agencies

3. Primary markets: It facilitate the issuance of new
securities such as examples are followings
The sale of new corporate stock, or new Treasury securities
Secondary markets: It facilitate the trading of existing
securities such as.
The sale of existing stock
Primary VS secondary markets

4. Capital market
A capital market is one in which individuals and institutions trade financial
securities.
Stock market
A stock market, equity market or share market is the aggregation of buyers
and sellers
Bond market.
A bond market is a debt investment in which an investor loans money to an
entity (corporate or governmental), which borrows the funds for a defined
period of time at a fixed interest rate
Types of financial markets

5. Money Markets
The money market, sometimes referred to the cash market due to its high
levels of liquidity and short term nature, is where securities with extremely
short term maturity dates are traded
Commodity market
A commodity market is a physical or virtual marketplace for buying, selling
and trading raw or primary products, and there are currently about 50 major
commodity markets worldwide
Derivatives Markets
Derivatives Markets are contracts whose value is based on an underlying
asset. Common derivatives include CFDs (Contract for Difference), futures,
options and swaps.

6. Foreign exchange market
This market determines the foreign exchange rate It includes all aspects of
buying, selling and exchanging currencies at current or determined prices
Spot market
The spot market or cash market is a public financial market in which financial
instrument or Commodities are traded for immediate delivery.
Interbank lending market
*The interbank lending market is a market in which banks
extend loans to one another for a specified term.

7. In finance, financial markets facilitate:
The raising of capital (in the capital markets)
The transfer of risk (in the derivatives markets)
The transfer of liquidity (in the money markets)
International trade (in the currency markets)
* Financial Markets Facilitate

8. Stock valuation
The stock valuation fundamentals aim to value the “Intrinsic” value
of the stock that shows the profitability of the business and its future
market value. Stock valuation is an important tool that can help you
make informed decisions about trading. It is a technique that
determines the value of a company's stock by using standard
formulas.

9. Stock valuation is usually divided into two Method
Absolute Valuation.
Absolute valuation intends to find the “intrinsic” value of the financial
instrument. This method only focuses on the fundamental strengths of the
company as the dividends, cash flow, and the growth rate for a single
company.
Relative valuation
It is also called valuation using multiples is the notion of comparing the
price of an asset to the market value of similar assets. In the field of
securities investment, the idea has led to important practical tools, which
could presumably spot pricing anomalies