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Introduction to Markets

Debt Finance and Loans Explained, Introduction to Markets »

Factors affecting supply for credit
Deregulation gave banks grater flexibility in issuing loans
This may have resulted in a greater volume of loans being extended to corporate borrowers
Factors affecting demand for credit
Several factors suggested are
–      1. Changes in portfolio management practices
–      2. Development of risk management procedures
–      3. Interaction of inflation and tax
–      4. Behavioural aspects

Changes in portfolio management practices
–      The introduction of active portfolio management may have led to increased share turnover, and therefore volatility of share prices
–      Consequently, debt may have been viewed as being comparatively more stable
Development of risk …

Introduction to Markets »

Financial Systems:
Facilitates the efficient flow of funds between lenders and borrowers via financial instruments
Allows individuals to allocate funds according to current and future consumption
Facilitates the implementation of government monetary policy
Financial Instruments:
Attributes of financial instruments
¨      Return or yield
¨      Risk
¨      Liquidity
¨      Time pattern of cash-flows
Equity
¨      Shares represent an ownership position
¨      An entitlement to share in the profits of the organisation
¨      Equity types
–      Ordinary shares
–      Preference shares
–      Quasi-equity instruments
Debt
¨      Debt instruments represent a contractual claim on the borrower to make specific payments in the form of interest and principal amounts
¨      Debt may be …

Introduction to Markets »

Organised markets enhance the efficiency with which trade in goods; services and assets may take place. This is so whether or not the trade is barter trade, or trade that involves the use of money as a medium of exchange. The introduction of money resulted in greater ease and efficiency in transactions and also facilitated saving by individuals whose current incomes were greater than their current expenditures. With wealth being accumulated in the form of money, specialised markets developed to enable the efficient transfer of funds from savers (surplus entities) …