FINANCIAL MARKET

Financial markets comprise of money market and capital market.

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Financial markets function as both primary and secondary markets for debt and equity securities.

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The secondary market refers to the original sale or sales of securities for the first time by governments and corporations.

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By law, public offerings of debt and equity must be registered with Securities Commision (SC).

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Money markets are the markets for debt securities that will be repaid in the long term.

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In money market, large firms also .......... when they have surplus cash (e.g: invest in commercial paper) and ............ when they are short of money.

• borrow; lend

• lend; borrow

• sell securities; buy securities

• issue securities; call back securities

All the following securities are traded in money market except

• treasury bills

• repurchase agreements

• bankers' acceptances

• debentures

Bond represents the ownership of the company as well as equity.

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Preference shares carry the right to fixed dividend which have priority to received claim on assets and returns before bondholder but after common shareholder.

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In Malaysia, the primary and secondary markets concerned are managed by Bursa Malaysia.

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