Question

Case #1
Suppose that you recently completed your MBA and have just reported to work as an
investment advisor at the consultancy firm of Wais and Qais Inc. One of the firm’s clients
is Saad, a professional table tennis player who has just come to the Afghanistan from
Japan. Saad is a highly ranked table tennis player who would like to start a company to
produce and market kit he designs. He also expects to invest substantial amounts of
money through Wais and Qais
Saad is very talented, and he would like to understand in general terms what will happen
to his money. Your boss has developed the following set of questions you must answer to
explain the financial system to Saad.

Question1:

a. What is the role of primary market in fund transferring from providers (savers) to users (borrowers?)

b. What is flow of fund? Who are the providers (savers) and users (borrowers) of capital?

c. What is financial markets? Describe some types of financial markets? How are secondary markets organized?

Please Attempt all above questions (a.b.c)

No plagiarism, only own wording has credit.

Answer 1

a. What is the role of primary market in fund transferring from providers (savers) to users (borrowers?)

• Primary market is market where Security first issued into the Market as well as the Fund for the company.
• A primary market issues new securities on an exchange for companies, governments, and other groups to obtain financing through debt-based or equity-based securities. Primary markets are facilitated by underwriting groups consisting of investment banks that set a beginning price range for a given security and oversee its sale to investors.
• Primary market offerings for stocks include private placement and preferential allotment. Private placement allows companies to sell directly to more significant investors such as hedge funds and banks without making shares publicly available. While preferential allotment offers shares to select investors (usually hedge funds, banks, and mutual funds) at a special price not available to the general public.
• Primary market gives opporunity for the User(Borrower) to raise the fund and for the saver to invest in Particular company.

b. What is flow of fund? Who are the providers (savers) and users (borrowers) of capital?

• Flow of fund is part of the Account which is useful for identifying the inflow and outflow of money which are taken into consideration.outmoded format for reporting a subset of the same information.
• The Provider of the Capital into the Primary Market are the Investor who invest in IPO and user are the Business owner,Promoter of the Company are the one who Raise the Money.

c. What is financial markets? Describe some types of financial markets? How are secondary markets organized?

• Financial Market is a Market issue of various Security is done to Raise the Money and also for the purpose of identifying the oportunity of trading,Investing to generate the Money.
• Financial Market 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.

Types of the Financial Market:

• Equity Market
• Debt Market
• Commodity Market
• Derivative Market

Secodary Market Organised:

• Secondary Market are place where in previously issued equity or financial instrrument came for the purpose of the Trading and provide Opportunity to the Investor for Investing.
• Secondary markets are primarily of two types – Stock exchanges and over-the-counter markets. Stock exchanges are centralised platforms where securities trading take place, sans any contact between the buyer and the seller. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are examples of such platforms