2.2Financial Markets relevant to Business's Financial Needs1.Financial marketsÃ¢ÂÂ¢places where financial products are bought and soldÃ¢ÂÂ¢an example of a financial product is bank loans2.Financial securitiesÃ¢ÂÂ¢contracts such as share certificate, bank loans and home loansÃ¢ÂÂ¢AKA financial assets or resources-Major participants in financial markets1.BanksÃ¢ÂÂ¢offer wide range of financial products to businesses and individuals such as bank bills, personal loans and overdraftsÃ¢ÂÂ¢An example of a bank is Commonwealth Bank2.Finance companies and insurance companiesÃ¢ÂÂ¢Finance companies borrow money from the general public in the form of consumer loans and business leasing. They provide medium term financing to businesses. Finance companies are important providers of lease finance; they provide the business with the use of equipment in return for regular payment.
Ã¢ÂÂ¢An example of finance company is GE Capital Australia (GECFA), it is the largest finance company in Australia. They borrow money from small investors by selling debentures and uses this money to provide consumer credits and small business loansÃ¢ÂÂ¢Insurance companies insure businesses against risks and they also provide surplus funds in the business3.
Merchant BanksÃ¢ÂÂ¢offer co-operate financial advice to large businessesÃ¢ÂÂ¢they also help businesses raise capital needed for acquisitionÃ¢ÂÂ¢an example: Macquarie bank4. Superannuation/Mutual fundsÃ¢ÂÂ¢invests large amounts of savings made by their contributors to things like shares in public companies and property5. CompaniesÃ¢ÂÂ¢They lend out surplus funds in the form of marketable securities such as bill of exchange of invests surplus on a short-term money market.
Ã¢ÂÂ¢an example: David Jones6. Government (Reserve Bank of Australia)Ã¢ÂÂ¢they provide overall supervision of the financial system in Australia-Role of Australian Stock Exchange (ASX)1. Primary marketÃ¢ÂÂ¢help new businesses raise initial capital needed to start operations2. Secondary marketÃ¢ÂÂ¢sell existing shares-Domestic and international influences and trends and their implications on the business's financial needs1. Impact of globalization, one global economy2. Interest rates, both international and domestic (foreign/domestic investment)3.