ECONOMICS
THE STOCK EXCHANGE MARKET
Stock exchange market is a highly organised market where investors can buy and sell existing securities like shares, stocks, debentures, etc. This is a market where those who are interested in purchase of securities are brought into contact with the sellers. The stock exchange is an essential part of the capital market to serve as a source of raising capital as well as a forum for financial investment. The market deals in old existing shares only, i.e. new ones are not traded in it. The stock exchange market ensures that every transaction must follow prescribed set of rules and regulations, which are complex in nature. Quoted companies are organisations whose…
CAPITAL MARKET
Capital market is a market for medium-term and long-term loans. The capital market serves the needs of industry and the commercial sector. It comprises all the institutions which are concerned with either the supply of or demand for long-term capital. Instruments used in capital market Instruments used in capital market are mainly stocks and shares. Stocks and shares are securities purchased by individuals, which is an evidence of contributing part of the total capital used in running an existing industry. At the end of a normal business year, stock and share holders receive dividend as a reward for contributing the money in running the business. Institutions involved in…
MONEY MARKET
Money market can be defined as a market for short-term loan. The market consists of institutions or individuals who either have money to lend or wish to borrow on a short-term basis. Instruments used in the money market Treasury bills: Treasury bill is normally issued by the central bank of a country, which assists the government to borrow money from the money market on short-term basis. Bill of exchange: Bill of exchange refers to a promisory note which shows the acknowledgement of indebtedness by a debtor to his creditor and his intention to pay the debt on demand or at an agreed time in future, normally ninety (90) days.…
TRADITIONAL FINANCIAL INSTITUTIONS
The traditional financial institutions came into existence several years before the establishment of modern banking system in many countries in the West African subregion. It involves the coming together of a group of people with common interest in the same place of work or community who mutually agree to pool their resources together in order to save, lend and manage money. These traditional financial institutions usually take the form of cooperative societies known as credit and thrift co-operative societies, which are given different names in different places, e.g. “ESUSU” or “NSUSU” in Yoruba, or “ETIO-UTU” in Igbo. It takes the form of association of people in the village, office, market,…
INSURANCE COMPANIES
Insurance companies are financial institutions that are concerned with insurance. Insurance may be defined as a contract between an insurer and an insured, under which an insurer promises to indemnify (compensate) the insured against loss, which he may suffer in future, upon the payment of a premium. It is a provision made by an individual or an enterprise against the occurrence of some future loss. There are certain risks which can be insured against. Examples are risks of fire, burglary or theft, accident, loss of goods in transit, untimely death and bodily injury to factory workers. Examples of insurance companies in Nigeria are: Reinsurance Corporation of Nigeria National Insurance…