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BBA Discussion Forum / Do u want to knw abt our Capital mkt? Do u want to knw hw to invest in share mkt
« on: January 07, 2011, 03:12:25 PM »
Well, I am trying to start a new topic named Money market and Capital market and how/when to invest in the share market and present situation of the share market. As a student of BBA department and an investor of the share market, I will represent some of my ideas, feelings with you.
At first I will give you some idea about Money market and Capital market and about its instrument then I will directly go to the share market discussion.
Before stating this topic, I want to say something. Some semester before I didn't have any idea about our Capital Market and Money market in Bangladesh, although I am a student of the business department. Our lecturer tried to teach in different types of the term on Capital Market and Money, but I used to memorize it. As a result, after a semester later I forgot everything, although I obtained "A+" or good result. Example If you ask yourself "what is the definition of Finance, Capital Market, common stock, bond, Mutual fund? I am sure that a very few students will give the appropriate answer, and somebody would not. On the other hand, If I ask you, how to use the mobile, how to play cricket, how to play computer game, I hope about 96% student will give the right answer. Why is it? Because Practice...Practice and Practice.
When you will choose Financial Institution and Market, Investment, Corporate Finance, Financial Analysis and Control, Bank Fund management etc courses, if you have a little idea about the capital market and money market, you can get the good result, and you can understand the term properly.
In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them.
The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (like the NYSE) or an electronic system (like DSE or CSE). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange.
Types of financial markets
There are two types of financial Markets. These are
1. Money Market
2. Capital Market
Money market a segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and leading in the short term, from several days to just under a year.
In one sentence: You can convert into cash within a very short period of time and it is less riskier than Capital market.
A market in which individuals and institutions trade financial securities. Organizations/ Institutions in the pubic and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary and secondary markets.
Capital markets are the financial markets that facilitate the funds for long-term use. There is no strict definition of long term, but the original maturity of the debt exceed one year, and usually the original maturity of the debt will be more than five years. Financial instruments with both intermediate term (one to ten years) and long term (more than 10 years) maturities are included in this category. The market for long-term funds where securities such as common stock, preferred stock and bonds are traded. Both the primary market for new issues and the secondary market for existing securities are part of the capital market also. Most long term borrowing in any economy is carried out by government and firms. When firms make new issue those securities in order to raise new funds for investment, they have to issue those securities on terms which make them attractive to the lenders.
In one sentence: Dhaka Stock exchange(DSE) is a long term market where you can trade share. You have to remember that as DSE is the long term market so you have to invest your money for long term.
To be continued...
At first I will give you some idea about Money market and Capital market and about its instrument then I will directly go to the share market discussion.
Before stating this topic, I want to say something. Some semester before I didn't have any idea about our Capital Market and Money market in Bangladesh, although I am a student of the business department. Our lecturer tried to teach in different types of the term on Capital Market and Money, but I used to memorize it. As a result, after a semester later I forgot everything, although I obtained "A+" or good result. Example If you ask yourself "what is the definition of Finance, Capital Market, common stock, bond, Mutual fund? I am sure that a very few students will give the appropriate answer, and somebody would not. On the other hand, If I ask you, how to use the mobile, how to play cricket, how to play computer game, I hope about 96% student will give the right answer. Why is it? Because Practice...Practice and Practice.
When you will choose Financial Institution and Market, Investment, Corporate Finance, Financial Analysis and Control, Bank Fund management etc courses, if you have a little idea about the capital market and money market, you can get the good result, and you can understand the term properly.
Market
In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them.
The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (like the NYSE) or an electronic system (like DSE or CSE). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange.
Types of financial markets
There are two types of financial Markets. These are
1. Money Market
2. Capital Market
Money Market:
Money market a segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and leading in the short term, from several days to just under a year.
In one sentence: You can convert into cash within a very short period of time and it is less riskier than Capital market.
Capital Market of Bangladesh
A market in which individuals and institutions trade financial securities. Organizations/ Institutions in the pubic and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary and secondary markets.
Capital markets are the financial markets that facilitate the funds for long-term use. There is no strict definition of long term, but the original maturity of the debt exceed one year, and usually the original maturity of the debt will be more than five years. Financial instruments with both intermediate term (one to ten years) and long term (more than 10 years) maturities are included in this category. The market for long-term funds where securities such as common stock, preferred stock and bonds are traded. Both the primary market for new issues and the secondary market for existing securities are part of the capital market also. Most long term borrowing in any economy is carried out by government and firms. When firms make new issue those securities in order to raise new funds for investment, they have to issue those securities on terms which make them attractive to the lenders.
In one sentence: Dhaka Stock exchange(DSE) is a long term market where you can trade share. You have to remember that as DSE is the long term market so you have to invest your money for long term.
To be continued...