Money, foreing exchange, finance

 What is Finance?

 Every way of monetary resources

 

What is Financial System?

Is where persons, institutions and markets related to money transactions operate in order to exchange it between savers, investors, lenders and borrowers.

 

What are the functions of a financial system?

-       To integrate stakeholders to exchange money.

-       To provide financial services to maximize their benefits.

-       To provide payment system for the exchange of goods and services

-       To provide financial capital for long-term formation

-       To make easier to the participants to liquidate their investment

-       To provide avenues for managing risk

-       Taking care of short-terms and long-terms need of its participants

-       To supply financial capital to government for public expenditure

-       To provide price information to make better decisions

-       To unify financial information

-       To create investment opportunities

-       To create the demand and supply of funds to determinate the interest rates, affecting money supply, inflation, and the possibility of foreign investments.

 

How are the main types of financial institutions categorized? Describe each one.

Banking and Non-banking: these are basically banks who provide transaction services, create deposits or credit, are subject to legal reserve requirements. The non-banking institutions that purvey credit.

Intermediaries and Non-intermediaries: the first ones are linked to savers and investors, lend money and move savings, all banking institution are intermediaries. Non intermediary institutions have resources not directly obtained from savers.

 

Which are the main classes of financial instruments issued in a financial system? Describe them in detail.

Sorry, I could not find it ☹

 

What are the distinctions between various types of financial markets according to their function? Explain them.

Money and capital markets: this one deals with short term claims with a maturity of one year or less but sometimes it can go up until 3 years.

Primary and secondary markets: the primary one deals with new financial claims or securities. The secondary market deals with securities and fluctuation that happens because of the demand and supply of security.