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WEEK 3
TOPIC: Types of financial Institutions and their functions
CONTENT:
- Money Market institution and its function
- Capital Market institution and its function
- How the stock exchange operates, Secondary and primary market
Sub-Topic 1: Meaning of Money Market Institution
Money Market: The market is a financial market for trading in short term financial assets. It consists of individuals (and organizations) who wish to lend out money on a short term and those who wish to borrow. It is therefore a market for short-term loans and investment.
Financial institutions which operate in the money market include:
- Central Bank
- Commercial Bank
- Acceptance House
- Discount houses
- Hire-purchase companies
- Finance companies
Instruments used in the money market
- Treasury Bills
- Call money funds
- A bill of exchange
- Treasury certificate
FUNCTIONS OR ADVANTAGES OF THE MONEY MARKET
- Provision of circulating capital for commerce and industry
- Offering investment opportunities on a short-term basis for people and organization to enable them earn interest
- Provision of investment advice to customer
- Provision of opportunity for the public to participate in the management of the economy.
- Mobilization of savings for investment.
Sub-Topic 2: CAPITAL MARKET
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