Question # 1 (6 Marks) Discuss the role of Financial Markets in Financial System of the...

Question # 1

Discuss the role of Financial Markets in Financial System of the Economy,

Question # 2

Write down the about recent trends in the financial system and how they may affect financial system in the future.

Solutions

Expert Solution

1. Role of the financial market in financial system of economy as follows-

A. They are indicators of the economic growth of a country

B. They will also help in maintaining the liquidity of a country.

C. They will be helpful in share price discovery of various stocks which are listed in to the country.

D. They will be helpful in adoption of a transparent monetary policy.

E. They will also provide platform for various investors to invest their money and appreciate their overall capital.

F. They will also provide the companies with the source of various kind of Financing.

2. Recent trends in financial system is about participation of a large number of investors and this has been leading out of unemployment that has been generated through coronavirus and a large number of people trying to make money through financial Markets and there is huge inflow into the financial Markets and a large number of additional market participants in order to discover the fair price of the various stocks.

This will be helpful in share price discovery and it will also help in active market participation of a large number of investors and there would be increase in the market capitalisation of a large number of companies and the prices will be efficient and transparent.

a large number of brokers and dealers companies are also emerging and the trend about the financial market is increasing and large number of new investors are also trying to invest into the financial market in order to exploit their rate of return and increase it in order to help them self in gaining maximum capital appreciation.

there has been a large amount of inflows in the mutual funds and the exchange traded fund and this has led to improving into the overall financial capital industry.

So it can be said that in contemporary Times a large number of of active investors are being seen into the markets and there had been increase in the market capitalisation of various companies.

jeff jeffy answered 1 year ago

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