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- The economic development of a country depends on the prooress of its various economic units, namely the corporate sector, government sector and the household sector.
- The role of the financial sector can be broadly classified into the savings function, policy function and credit function.
- The main types of financial markets are: money market, capital market, forex market and credit market.
- While designing a financial instrument, the issuer must keep the following in mind: cash flows required, taxation rules, leverage expected, dilution of control facts, transaction costs to be incurred, quantum of funds sought, maturity of plan required, prevalent market conditions, investor profile targeted, past performance of issues, cost of funds to be borne, regulatory aspects to abide by.
- While investing in a financial instrument, the investor must keep in mind the following: risk involved, liquidity of the instrument, returns expected, possible tax planning, cash flows required and simplicity of investment.
- Various financial intermediaries came into existence to facilitate a proper channel for investment. The important ones are: stock exchanges, investment bankers, underwriters, registrars, depositories, custodians, primary dealers, satellite dealers and forex dealers.