NKUMBA UNIVERSITY

SCHOOL OF BUSINESS ADMINISTRATION.

COURSE : FUNDAMENTALS OF BUSINESS ADMINISTRATION.

TASK : CLASS PRESENTATION.
LECTURER NAME :MR MPALANY MICHEAL.
GROUP : GROUP TWO (2).

PARTICIPANTS

NAMES INDEX NUMBER.

OMARA LAWRENCE :2024/AUG/NCBA/C236184.

RIO DAVID ARUK :2400103193.

ARVUGA SAMUEL LINDA :2024/AUG/NCBA/C236512/DAY.

KABHANG SHARON :2024/AUG/NCBA/C236388/DAY.

NASSUNA KAREN JOYCE :2024/AUG/NCBA/C236230/DAY.

PRIMARY MARKET.
The primary market is a segment of the financial market where new securities are
issued and sold for the first time. In this market companies or governments offer their
new stocks or bonds to investors directly, often through an initial public offering (IPO) for
stocks or a bond issuance for debt securities. The primary market is essential for raising
capital allowing issuers to obtain funds for various.

KEY FEATURES OF THE PRIMARY MARKET

Issuance of new securities. Companies create and sell new shares or bonds to
investors.
Direct sale. Investors purchase these securities directly from the issuer, often with the
help of underwriters (investment banks).
Capital raising. The fund raised are used by the issuer for business growth.
The pricing. The price of the securities is typically determined through a combination of
market demand, valuation and underwriting assessments.

PROCESSES INVOLVED IN THE PRIMARY MARKET.

Preparation.
Before issuing securities, a company often hires investment banks or underwriters to
guide them through the process. This include drafting a prospectus that provides details
about the company, its financial health and risk involved.
Regulatory approval.
Companies must file with regulatory authorities like the SEC in the USA to ensure
compliance with laws governing securities.
Pricing and allocation.
Underwriters help determine the initial price of the securities based on market analysis
and investor interest. They also allocate shares to various investors.
Issuance.
Once everything is set, the securities are officially issued and investors purchase them
directly from the issuer.

KEY PARTICIPANTS.

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Issuers.
These are the companies or governments looking to raise funds through the sale of
securities.
Underwriters.
Typically, investment banks that assist issuers in the process of selling securities. They
may buy the entire issue and sell it to investors.
Investors.
Individual or institutional investors who purchase the newly issued securities. This group
includes retail investors, mutual funds, pension funds and hedge funds.

TYPES OF SECURITIES IN THE PRIMARY MARKET.

Each type of security serves different investors needs and preferences and
understanding these options is essential for both issuers and investors in the primary
market.
Here are some of the securities traded in primary market;
Equities securities (stocks).
Companies issue shares to raise capital. This can be done through IPOs or follow on
offerings. I.e.
Common stock. Represents ownership in a company and comes with voting rights.
Common shareholders may receive dividends though these are not guaranteed.
Preferred stock. A hybrid security that has characteristics of both equity and debt.
Preferred shareholders receive fixed dividends and have a higher claim on assets than
common shareholders, but typically do not have voting rights.
Debt securities (bonds).
Government or corporations issue bonds to borrow money from investors, promising to
pay interest and return the principal at maturity. Examples;
Bonds. Long term debt instruments issued by corporation or government to raise
capital. Bondholders receive periodic interest payments and the principal amount upon
maturity.
Debentures. A type of bond that is not secured by physical assets or collateral.
Debentures rely on the credit worthiness of the issuer for repayments.
Notes. Shorter term debt instruments that usually have maturities of one to ten years (1-
10 years) offering fixed interest payments.

pg. 2
Hybrid securities;
Convertible bonds. Bonds that can be converted into a predetermined number of shares
of the issuing company’s common stock. This gives investor the potential for equity
upside while providing fix income.
Warrants. Long term options that allow the holder to purchase a company’s stock at a
specific price before expiration. They are often issued alongside bonds or preferred
stock to make the offering more attractive.
Government securities;
Treasury bills (T-Bills). Short term government securities that are sold at a discount and
mature in one year or less. They do not pay interest but are redeemed at face value.
Treasury notes (T-Notes). Medium term securities with maturities ranging from two to
ten years, offering fixed interest payments.
Treasury bonds (T-Bonds). Long term securities with maturities greater than ten years,
also providing fixed interest payments.
Municipal securities;
Municipal bonds. Issued by states and local governments to finance public projects,
these bonds may provide tax exempt interest income to investors.
Asset-backed securities (ABS).
Securities back by a pool of assets, such as loans, leases or receivables. Investors
receive payments derived from the cash flow generated by these underlying assets.

SIGNIFICANCE OF PRIMARY MARKET.

The primary market plays a crucial role in the financial economy as a whole. Here are
some significant aspects of primary market.
Capital formation.
The primary market plays a crucial role in the economy by providing capital for the
businesses to expand and invest.
Investment opportunities.
It offers new investment opportunities for investors looking to participate in a company’s
growth from the ground up. This can lead to potential capital appreciation.
Price discovery.

pg. 3
The primary market helps in establishing the initial price of securities based on investor
demand and company valuation. This price discovery process provides valuable
information to the market.
Market liquidity.
By enabling new issuances, the primary market contributes to overall market liquidity.
This liquidity is essential for investors who may need to buy or sell securities in the
secondary market.
Economic indicators.
Activity in the primary market can serves as an indicator of economic health. A robust
primary market suggests confidence in the economy, while a slowdown may signal
economic challenges.
Corporate governance.
When companies go public, they are subject to regulatory oversight and reporting
requirements which can improve transparency and accountability. This can enhance
corporate governance practices.
Diversification of ownership.
The primary market allows a broader range of investors to participates in the ownership
of companies. This diversification can lead to more stable ownership structures and
reduce the risk of concentrated power.
Innovation and growth.
By providing access to capital, the primary markets support innovation and
entrepreneurship. Startups and growing companies can secure the funding they need to
develop new products and services.
Government funding.
Governments can issue bonds in the primary market to finance public projects,
infrastructure and services. This funding is vital for economic development and public
welfare.
Wealth creation.
Participation in the primary market can lead wealth creation for individual and
institutional investors, contributing to broader economic prosperity.
Market efficiency.
A well-functioning primary market contributes to the overall efficiency of the financial
system, helping to ensure that the capital is allocated to its most productive use.

pg. 4
In summary, the primary market is significant for its role in facilitating capital flow,
promoting economic growth, providing investment opportunities and enhancing market
efficiency. Its health and activity levels are vital indicators of overall economic
performance.

RISKS INVOLVED IN THE PRIMARY MARKET.

The primary market where new securities are issued and sold for the first time carries
various risks for investors and issuers. Some key risks involved;
Underwriting risk.
Investment banks or underwriters may overestimate the demand for new issue, leading
to unsold shares or bonds which can negatively impact the issuer’s reputation and
finances.
Pricing risk.
If securities are priced too high, they may not attract investors resulting in a lack of
demand. Conversely if priced too low, the issuers may not raise the intended capital.
Execution risk.
The process of launching IPO or new issue can encounter delays or complications,
which may affect pricing and investor confidents.
Dilution risk.
Existing shareholders may face dilution of their ownership if a company issues
additional shares, potentially affecting the value of their investments.
Information risk.
The investors rely on the information given by issuers. If this information is misleading
or incomplete, it can lead to poor investment decisions.
Market risk.
New securities can fluctuate in value after issuance and investors may face losses if the
market does not perform as expected.
Company performance.
The future performance of the issuing company can affect the values of its securities.
Poor performance post-issuance can lead to declines in stock prices.
Regulatory risks.

pg. 5
Changes in regulations can impact the primary market and the companies operating
within it. New issuance must comply with various regulations as changes in the
regulations can affect the to issue securities or their attractiveness to investors.

SECONDARY MARKET.
After the initial sale in the primary market, these securities then move to the secondary
market where they can be bought and sold among investors.
Secondary market is the segment of the financial market where previously issued
securities are bought and sold among investors.
Unlike the primary market, where new securities are created and sold for the first time,
secondary market deals with the trading of existing securities.
This market plays a crucial role in providing liquidity, enabling investors to sell their
holdings and facilitating price discovery.

KEY FEATURES OF SECONDARY MARKET.

Trading of existing securities.
The secondary market involves the buying and selling of securities that have already
been issued in the primary market.
Liquidity.
One of the primary functions of the secondary market is to provide liquidity to investors.
This means that investors can quickly buy or sell their securities without significantly
impacting the price.
Price discovery.
Prices in the secondary market are determined by supply and demand dynamics. The
trading activity reflects investor’s perceptions of a security’s value based on various
factors including market conditions, company performance and economic indicators.
Market participants.
The secondary market involves various participants including retail investors,
institutional investors like mutual funds and pension funds, market makers, and broker
dealers.

TYPES OF SECONDARY MARKETS.

Stock exchanges market.

pg. 6
These are regulated market places where shares of publicly traded companies are
listed and traded. Examples include the New York Stock Exchange (NYSE) and
NASDAQ.
Over the counter (OTC) market.
This is a decentralized market where trading occurs directly between parties, often
facilitated by broker dealers. OTC markets are used for trading securities not listed on
formal exchanges such as smaller companies or certain derivatives.
Bond markets.
Similar to stock exchanges, there are specific markets for trading bonds which can
include both government and corporate bonds.

IMPORTANCE OF SECONDARY MARKET.

Liquidity.
The secondary market provides liquidity to investors. It allows them to buys and sells
securities quickly. Which means that investors can convert their investments into cash
when needed without significantly affecting the security’s price.
Price discovery.
This market helps in determining the fair value of securities through the forces supply
and demand. The trading activities in the secondary market reflect the market’s
perception of a company’s value which can provide useful insight to investors.
Investment flexibility.
Investors can adjust their portfolios by buying or selling their securities as their financial
goals and market conditions change. This flexibility encourages more participation in the
market.
Risk management.
The secondary market allows investors to hedge risks. For example, they can sell
securities to minimize losses or diversify their holding to manage exposure.
Regulatory oversight.
The secondary market is usually subject to regulatory oversight which helps ensures fair
practices and protects investors from fraud and manipulation.
Capital formation.
By providing a platform for the trading of securities the secondary market indirectly
supports the primary market where companies raise capital by issuing where company

pg. 7
raises capital by issuing new shares. A robust secondary market can attract more
companies to go public.
Access to information.
The secondary market facilitates the flow of information about the performance of
companies and the economy. Price movements and trading volumes can indicate
trends, helping investors make informed decisions.
Investor confidence.
A robust secondary market boost investor confidence as it assures them that they can
sell their sell their securities easily if needed. Investors are more likely to invest in the
primary where new securities are issued if they know they can easily sell those
securities later.
Valuation of security.
The price determined in the secondary market provide a benchmark for valuing
securities, influencing the pricing of future issues in the primary market.
Efficient capital allocation.
By allowing investors to trade securities freely, the secondary market ensures that
capital is allocated efficiently across different sectors of the economy.
Economic indicator.
The performance of the secondary market can serve as an economic indicator,
reflecting investor sentiment and broader economic conditions.

RISK IN THE SECONDARY MARKET.

The secondary market where securities are traded after their initial issuance, carries
several risks for investors. Below are some key risks to consider;
Market volatility.
The secondary market can experience significant price fluctuations, leading to potential
losses for the investors.
Liquidity risk.
While the secondary market generally offers liquidity, certain securities may be harder
to sell quickly especially during market downturns.
Counterparty risk.

pg. 8
In OTC transactions, there is a risk that the other party may default on the transaction.
In trades involving derivatives or other complex instruments, there is a risk that other
party may not fulfil their obligations.
Market manipulation.
The lack of regulation in some OTC markets can fraudulent activities such as pump and
dump schemes.
Credit risk.
There is a risk that the issuer of a bond or security may default on their obligations,
impacting the value of the security.
Interest rate risk.
Changes in interest rates can affect the value of fixed income securities. Rising interest
rates typically lead to falling bond prices.
Regulatory risk.
Changes in laws and regulations can impact the operations of companies and the
securities market, affecting the value of investments.
Operational risk.
This involves risks arising from failures in internal processes, system or policies which
can affect trading and settlement.
Psychological risk.
Investors behavior can be influenced by the emotions such as fear and greed leading to
irrational decision making.
STRUCTURE OF THE SECONDARY MARKET.
Formal exchanges.
Stock exchanges are centralized platforms where securities are traded. They have
Strick listing requirements and regulatory oversight. This structure helps ensure
transparency and fair-trading practices.
Decentralized markets.
In contrast the OTC market operates without a centralized exchange. Transactions are
conducted directly between parties, often through phone or electronics networks. This
market is less regulated which can lead to higher risks.

TRADING MECHANISMS IN THE SECONDARY MARKETS.

pg. 9
The trading mechanism in the secondary market involves various processes and
systems that facilitates the buying and selling of securities after their initial issuance.
Below is an overview how it works.
Market participants;
Investors.
Individuals or institutions looking to buy or sell securities. There are two types of
investors. I.e.;
Retail investors. Individual investors who buy and sell securities for personal accounts.
They often rely on brokerage platforms to execute their trades.
And institutional investors. These include entities like mutual funds, pension funds,
insurance companies and hedge funds. They usually have significant capital and
influence market movements due to the volume of their trades.
Market makers.
These are firms or individuals that provide liquidity to the market by being willing to buy
and sell securities at any time. They facilitate trading by quoting bid (buy) ask (sell)
prices, helping to narrow the spread between them.
Brokerage firms/brokers.
Investors typically execute trade through brokerage firms, which acts as intermediaries
between buyers and sellers. They earn commissions for their services.
Exchanges.
Platform where securities are listed and trades occur such as the New York stock
exchange (NYSK) or NASDAQ (National Association of Securities Dealers Automated
Quotation).

TYPES OF ORDERS.
Market orders. Buys or sells orders at the best available price. These are executed
immediately.
Limited orders. Buy or sell orders set at a specific price. They are only executed when
the market reaches that price.
Stop orders. Orders that become market orders once a specified price is reached. It is
used to limit losses.

pg. 10
ORDER EXECUTION.
Order matching. Brokers submit orders to exchanges where an order matching system
pairs buyers and sellers based on price and time priority.
Trade confirmation. Once an order is matched a trader confirmation is sent to both the
buyer and seller detailing the transaction.
SETTLEMENT PROCESS.
After a trade is executed, it goes through a settlement process where the ownership of
the security is transferred from the seller to the buyer. This typically occurs within a few
days (T+2 is common, meaning trade date plus two business days).
CLEARING HOUSES.
Clearing houses act as intermediaries between buyers and sellers ensuring that both
parties fulfill their obligations. They help manage the risks associated with the trade and
guarantee the settlement.
REGULATORY FRAMEWORK.
The secondary market operates under the supervision of regulatory bodies.
Government agencies like securities and exchange commission (SEC) in the USA,
oversee the secondary market to ensure fair trading practices, protect investors and
maintain market integrity.
ELECTRONIC TRADING.
Most secondary market trading is conducted electronically through trading platforms,
allowing for faster execution and greater access to information.
CONTINUOUS TRADING.
The secondary market operates continuously during trading hours, with price fluctuating
based on supply and demand dynamics.
MARKET INDICES.
Indices like the S&P 500 or Dow jones industrial Average are used to track the
performance of a selection of securities providing insights into market trends.
FACTORS INFLUENCING SECONDARY MARKET.
Economic indicators.
Economic data such as employment rates, GDP growth and inflation, can significantly
impact investor sentiment and market performance.
Interest rates.

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Changes in interest rates can affect the attractiveness of stocks versus bonds. Rising
interest rates may lead to decreased stock prices as borrowing costs increase.
Company performance.
Earning reports, news releases and other company-specific information can lead to
changes in stock prices. Positive news can drive prices up while negative news can
lead to declines.
Market sentiment.
Psychological factors such as fear; greed or overall investor confidence can lead to
market fluctuations. Investor behavior often drives shot term price movements.

TYPES OF SECURITIES TRADED IN THE SECONDARY MARKET.

In the secondary market, a wide variety of securities are traded enabling investors to
buy and sell existing financial instruments. Understanding the different types of
securities available in the secondary market is essential for investors seeking to build
and manage their portfolios effectively.
Below are the main types of securities that are commonly traded in the secondary
market;
Equities (Stocks).
Common and preferred stock. Common stocks represent ownership in a company and
come with voting rights. Shareholders may benefit from capital appreciation and
dividends. while preferred stocks have a higher claim on asset and earnings than
common stocks, often providing fixed dividends. However, they usually do not come
with voting rights.

Debts securities.
Bonds. Various types of bonds including government bonds, corporate bonds, municipal
bonds and convertible bonds are actively traded in the secondary markets.
Government bonds. Issued by national governments. Example us treasury bonds. It is
considered low risk.
Corporate bonds. Issued by companies to raise capital with varying levels of risk based
on the issuers’ credit worthiness.
Municipal bonds. Issued by states, municipalities or counties, often offering tax benefits
to investors.

pg. 12
Convertible bonds. These are bonds which can be converted into predetermined
number of the company’s equity shares, providing potential upside if the company
performs well.
Derivatives.
Options. Contract that gives the holder the right but not obligation to buy or sell an
underlying asset such as stocks at a specified price before a certain date.
Future contracts. Agreement to buy or sell an asset at a predetermined future date and
price, often used for hedging or speculating on price movements.
Exchange traded funds (ETFs).
Exchange traded funds are investment funds that are traded on stock exchanges. They
typically track an index, commodity or basket of assets and allow investors to gain
exposure to a diversified portfolio without purchasing individual securities.
Mutual funds.
While mutual funds are bought and sold in the secondary market, they are usually
traded at the end of the trading day at the net asset value (NAV). They allow investor to
pool their money to invest in a diversified portfolio managed by professionals.
Real estate investment trusts (REITs).
Real estate investment trusts are companies that own, operate or finance income
producing real estate. They are traded like stocks on the major exchanges and provide
investors with a way to invest in real estate without direct ownership.
Commodities.
Certain commodity-based securities such as commodity ETFs (exchange traded funds)
or mutual funds can be traded in the secondary market, allowing investors to gain
exposure to physical commodities like gold, oil or agricultural products.
American depository receipts (ADRs).
American depository receipts represent shares in foreign companies and are traded on
us exchanges. They provide a way for US investors to invest in international companies
without dealing with foreign stock markets.
Certificate of deposits (CDs).
While certificate of deposits is typically issued by banks, they can be traded in the
secondary market allowing investors to buy or sell these time deposits before their
maturity date.

MARKET TRENDS AND INNOVATIONS.

pg. 13
Technological advancements. The rise of electronic trading platforms has transformed
how securities are bought and sold, leading to faster transactions and lower costs.
Algorithmic trading. Many institutional investors use algorithms to execute trade based
on predefined criteria, enhancing efficiency but also contributing to Market volatility.

Conclusion.
Inconclusion, primary market and secondary market is a very vital branches of financial
market and it is very crucial for investors to understand the significance, risk, features
and how each branches function or operate in order to make an informed investment
decision.

FINANCIAL MARKET. (RESEARCHED BY KABANG SHARON).

Financial Market is a broad term that encompasses various markets where financial
instruments are exchanged.
These markets facilitate the buying and selling of assets, helping to allocate resources
efficiently in the economy.
Financial market is a financial is a platform where buyers and sellers engage in the
trading of financial securities, such as stocks, bonds, currencies and derivatives.
According to John.C. Hull, Financial market is a system that enables the trading
financial assets providing liquidity and price discovery.

SUB-CATEGORIES OF FINANCIAL MARKET.

Primary Market
Where new securities are issued (e.g. initial public offerings) (IPOS)
Where existing securities are traded (e.g. stock exchange)

TYPES OF FINANCIAL MARKET.

Capital Market.
Deals with long term securities and investments, for example stocks (equity) and bonds
(debt)
Stock is where shares of publicity traded companies are bought and sold.

pg. 14
Bonds: Is where participants can issue new debt or buy and sell existing debt securities
Money Market.
Money market focuses on short-term debt instruments, usually with maturities of less
than one year.
For example, Treasury bills, commercial paper, certificates of deposit, repurchase
agreements.
It provides liquidly for short-term needs and helps manage cash flow for businesses and
governments.
Foreign markets (Forex).
This is where currencies are traded, this market is essential for international trade and
investment.
It facilitates international trade, tourism and investment by enabling currency
conversion.
It is the largest financial market in the world, creating 25 hours on week days.
Derivatives Market.
It is where trades financial instruments whose value is derived from underlying assets.
For example, options, future contracts, swamps and forwards
It’s used to ledging against risk and for speculation on price movements.
Commodities market.
It’s where raw materials or primary products are exchanges for example, oil, gold and
agricultural products and future contracts
It provides price discovery and helps manage the supply and demands of raw materials.
Insurance market.
This is where insurance products are traded providing protection against financial risks.
From rental propetiesFor example, life insurance and property insurance etc.
It provides risk management to individual and businesses
Real estate market.
This is where buying, selling and leasing of properties is carried out. For example,
physical properties and rea estate investment trusts (REITS)
It’s were investment in physical assets and income generation from rental properties
Cryptocurrency market.
It’s a relatively new and evolving market dealing with digital or virtual currencies. For
example, cryptocurrencies like Bitcoin, Ethereum and Altcoins.
pg. 15
It provides opportunities for investment and speculation in digital assets.

PARTICIPANTS OF FINANCIAL MARKET.

Investors:
Individuals or institutions looking to invest money to earn a return.
Issuers:
Entities that issue securities to raise capital, such as corporations and governments.
Intermediaries:
Financial institutions such as banks and brokers that facilitate transactions between
buyers and sellers.

FUNCTIONS OF FINANCIAL MARKET.

Price discovery:
It helps determine the price of financial assets through supply and demand.
Liquidity:
It provides a platform for assets to be easily bought or sold
Capital formation:
They facilitate the raising of capital for business and governments, enabling growth and
development.
Risk management:
It allows participants to hedge against risks through various instruments.

REGULATORY FRAMEWORK OF FINANCIAL MARKET.

Financial markets are regulated by government agencies to ensure transparency,
protect investors and maintain fair practices.

ADVANTAGES OF FINANCIAL MARKETS.

Efficient capital allocation
Financial markets facilitate the efficient allocation of resources by connecting savers
and borrowers. This allows for capital to flow to projects and companies that need
funding, ultimately promoting economic growth.

pg. 16
liquidity.
financial markets provide a platform to easy buying and selling of assets, granting
participants the ability to convert investments into cash quickly. This liquidity helps
investors access their funds when needed without significant losses.
Price discovery:
Markets help establish the fair value of financial assets through supply and demand
dynamics. This price discovery process ensures that assets are valued at their true
market worth aiding investors in making informed decisions.
Diversification opportunities.
Investors can diversify their portfolios by investing in various asset classes, such as
stocks, bonds and commodities. This strategy can help reduce risk by spreading
investments across different sectors and geographies.
Access to Capital.
Business can raise funds through financial markets by issuing stocks and bonds. This
access to capital enables companies to financial expansions, research and
development and other growth initiatives.
Risk management.
Financial markets provide various financial instruments, such as options and futures,
that allow participants to hedge against potential risks. This capability helps invests
manage uncertainty and protect their investments.
Economic indicator.
financial markets often serve as indicators of the overall economic health of a country.
Market trends can reflect investor sentiment and economic conditions, providing
valuable insights to policymakers and analysts.
Investment opportunities.
Financial markets offer a wide range of investment opportunities for individual and
institutional investors, allowing them to grow their wealth through capital gains,
dividends and interest income.
Transparency and Regulation.
Regulated financial markets promote transparency and fairness, providing investors
with essential information about the assets they are trading. This regulation helps build
trust in the market.
Technological Innovation.
The development of financial markets has encouraged technological advancements,
leading to more efficient trading systems, improved information dissemination and
increased access to global markets.

pg. 17
DISADVANTAGES
Volatility and uncertainty. Financial markets can be highly volatile, which can lead to
significant losses for investors, especially in short-term trading. Price fluctuations can be
unpredictable and driven by factors like economic news, political events and market
sentiment.
Risk of fraud
The complexity of financial markets can attract fraudulent activity such as insider
trading, Ponzi schemes and various scams.
Investors may fall prey to dishonest brokers or companies that misrepresent financial
information.
Market manipulation.
Large institutional investors or groups can manipulate market price through their buying
and selling actions, creating an unfair environment for smaller investors.
Access to information.
There may be an unequal distribution of information, where institutional investors
access to data, giving them an edge over individual investors. This can lead to
disparities in investment performance.
Psychological factors.
Investors psychology can play a significant role in market movements. Greed and fear
can lead to irrational decisions, resulting in market bubbles or crashes.
Investment costs.
Transaction fees, management fees and other costs can erode profits. Active trading, in
particular, may incur significant expenses that can outweigh potential returns.
Dependency on economic conditions.
Financial markets are heavily influenced by macroeconomic factors such as interest
rates, inflation and unemployment.
Economic downturns can lead to widespread losses and reduced access to capital.
Lack of regulation in some areas.
Although many financial markets are regulated, certain segments such as
cryptocurrency markets, may lack comprehensive oversight increasing the risk for
investors.
Exposure to global risks.
Events occurring in one part of the world can have a ripple effect on global financial
markets, leading to unpredictable shifts in investment values.

pg. 18
Emotional stress.
The pressure to make quick decisions in volatile markets can lead to emotional stress
for investors, impacting their overall well-being.

In conclusion, the financial market plays a vital role in the global economy by
facilitating the exchange of financial instruments, enabling price discovery and
promoting liquidity. It serves as a platform for investors to grow their wealth, manage
risks, and fund new ventures. The interactions among various participants, including
individual investors, institutions, regulators and market makers shapes the dynamics of
the markets.

FEATURES OF DEVELOPED MONEY MARKET. (RESEARCHED BY RIO DAVID)

The following are the general features of a money market:

It is market purely for short-term funds or financial assets called near money. It deals
with financial assets having a maturity period up to one year only. It deals with only
those assets which can be converted into cash readily without loss and with minimum
transaction cost. Generally, transactions take place through phone i.e., oral
communication. Relevant documents and written communications can be exchanged
subsequently. There is no formal place like stock exchange as in the case of a capital
market. Transactions have to be conducted without the help of brokers.
The components of a money market are the Central Bank, Commercial Banks, Non-
banking financial companies, discount houses and acceptance house. Commercial
banks generally play a dominant in this market.
OBJECTIVES OF MONEY MARKET.
The following are the important objectives of a money market:
To provide a parking place to employ short-term surplus funds.
To provide room for overcoming short-term deficits.
To enable the Central Bank to influence and regulate liquidity in the economy through
its intervention in this market.
To provide a reasonable access to users of Short-term funds to meet their requirements
quickly, adequately and at reasonable costs Major participants and players in financial
markets.

pg. 19
In the financial markets, there is a flow of funds from one group of parties (funds-surplus
units) known as investors to another group (funds-deficit units) which require funds.
However, often these groups do not have direct link. The link is provided by market
intermediaries such as brokers, mutual funds, leasing and finance companies, etc. All In
all, there is a very large number of players and participants in the financial market.
These can be grouped as follows:

The individuals:
These are net savers and purchase the securities issued by corporates. Individuals
provide funds by subscribing to this security or by making other investments.
The Firms or corporates:
The corporates are net borrowers. They require funds for different projects from time to
time. They offer different types of securities to suit the risk preferences of investors’
Sometimes, the corporates invest excess funds, as individuals do. The funds raised by
issue of securities are invested in real assets like plant and machinery. The income
generated by these real assets is distributed as interest or dividends to the investors
who own the securities.
Government:
Government may borrow funds to take care of the budget deficit or as a measure of
controlling the liquidity, etc. Government may require funds for long terms (which are
raised by issue of Government loans) or for short-terms (for maintaining liquidity) in the
money market. Government makes initial investments in public sector enterprises by
subscribing to the shares, however, these investments (shares) may be sold to public
through the process of disinvestments.
Regulators:
Financial system is regulated by different government agencies. The relationships
among other participants, the trading mechanism and the overall flow of funds are
managed, supervised and controlled by these statutory agencies. In India, two basic
agencies regulating the financial market are the Reserve Bank of India (RBI) and
Securities and Exchange Board of India (SEBI). Reserve Bank of India, being the
Central Bank, has the primary responsibility of maintaining liquidity in the money market’
It undertakes the sale and purchase of T-Bills on behalf of the Government of India.
SEBI has a primary responsibility of regulating and supervising the capital market. It has
issued a number of Guidelines and Rules for the control and supervision of capital
market and investors’ protection. Besides, there is an array of legislations and
government departments also to regulate the operations in the financial system.

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Market Intermediaries:
There are a number of market intermediaries known as financial intermediaries or
merchant bankers, operating in financial system. These are also known as investment
managers or investment bankers. The objective of these intermediaries is to smoothen
the process of investment and to establish a link between the investors and the users of
funds. Corporations and Governments do not market their securities directly to the
investors. Instead, they hire the services of the market intermediaries to represent them
to the investors. Investors, particularly small investors, find it difficult to make direct
investment. A small investor desiring to invest may not find a willing and desirable
borrower. He may not be able to diversify across borrowers to reduce risk. He may not
be equipped to assess and monitor the credit risk of borrowers. Market intermediaries
help investors to select investments by providing investment consultancy, market
analysis and credit rating of investment instruments. In order to operate in secondary
market, the investors have to transact through share brokers. Mutual funds and
investment companies pool the funds(savings) of investors and invest the corpus in
different investment alternatives.
Some of the market intermediaries are:
Lead Managers Bankers to the Issue Registrar and Share Transfer Agents Depositories
Clearing Corporations, Share Brokers Credit Rating Agencies, Underwriters Custodians,
Portfolio Managers Mutual Funds Investment Companies. These market intermediaries
provide different types of financial services to the investors. They provide expertise to
the securities issuers. They are constantly operating in the financial market. Small
investors in particular and other investors too, rely on them.
It is in their (market intermediaries) own interest to behave rationally, maintain integrity
and to protect and maintain reputation, otherwise the investors would not be trusting
them next time. In principle, these intermediaries bring efficiency to corporate fund
raising by developing expertise in pricing new issues and marketing them to the
investors.

WHAT IS MONEY MARKET (BY KAREN).

The money market is a sector of the financial market in which financial instruments with
high liquidity and short maturities are traded. It is characterized by the borrowing and
lending of funds for short periods, typically less than one year. The money market is
crucial for managing liquidity in the economy, providing a mechanism for governments
and corporations to meet their short-term funding needs.

KEY FEATURES OF THE MONEY MARKET

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Instruments.
the money market includes various instruments such as treasury bills, commercial
paper, certificates of deposit, repurchase agreements and banker’s acceptances. These
instruments are generally considered low risk due to their short maturities and the credit
worthiness of the issues.
Participants.
these include central banks, commercial banks, mutual funds, corporations, and other
financial institutions. Each participant plays a role in facilitating transactions that help
manage cash flow and liquidity.
Liquidity.
One of the defining characteristics of the money market is its high liquidity. Investors
can quickly convert their investments into cash without significant loss of value. This
feature makes it an attractive option for those looking to park funds temporarily while
earning a return.
Interest Rates.
Interest rates in the money market are typically lower than those found in longer term
market due to the reduced risk associated with shorter maturities. The rates can
fluctuate based on supply and demand dynamics as well as monetary policy set by
central banks.
Risk factors.
While generally considered safe, there are still risks associated with money market
investments, including credit risk (the risk that an issuer may default) and interest rate
risk (the risk that rising interest rates may lead to losses).
Regulation.
The money market is a subject to regulation by governmental authorities to ensure
stability and transparency within financial system.

CHARACTERISTICS OF MONEY MARKET

Low risk.
The money market instruments are generally considered low risk investments due to
their short-term maturities and the credit worthiness of issuers like government entities.
This characteristic makes them attractive to conservative investors looking for stable
returns.
Interest rates.

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The money market is characterized by fluctuating interest rates that reflect supply and
demand dynamics for short term funds. These rates are influenced by central bank
policies, economic conditions and overall sentiment.
Market participants.
The money market involves various participants including banks, financial institutions,
corporations, mutual funds. Each participant has different roles such as borrowers
seeking short term financing or lenders looking to invest excess cash temporarily.
Regulatory frame work.
The money market operates under a regulatory frame work that ensures transparency
and stability within the financial system. Central banks often play a role in regulating this
market through monetary policy tools.
Over the counter market.
Transactions in the money market typically occur over the counter meaning they are
conducted directly between parties rather than on a centralized exchange. This allows
for greater flexibility but requires participants to conduct due to diligence on counter
parties.
Yield curve influence.
The yields on money market instruments are closely tied to the broader yield curve
which reflects interest rates across different maturities in the economy. Changes in
monetary policy can lead to shifts in yield curves impacting money market rates.
Global nature.
The money market operates globally with various countries having their own distinct
markets influenced by local economic, regulations, and currency considerations.

FUNCTIONS OF MONEY MARKET

Liquidity management.
One of the primary functions of the money market is to provide liquidity to financial
institutions and business. By allowing participants to borrow or lend funds on a short-
term basis, the money market ensures that entities have access to cash when needed.
This is particularly important for banks that may experience fluctuations in their reserves
due to customer withdraws.
Interest rate determination.

pg. 23
The money market plays a significant role in determining short term interest rates. The
rates at which borrowers can obtain funds in the market reflect supply and demand
dynamics. Central banks can also influence these rates through monetary policy tools
such as open market operations which involve buying or selling government securities
to adjust the amount of money circulating in the economy
Risk management.
Participants in the money market often use various instruments to manage risk
associated with interest rate and liquidity shortages. Instruments include; treasury bills,
commercial paper, repurchase agreements allow investors to diversify their portfolios
while maintaining low levels of risk due to their short-term maturities.
Price discovery.
The money market contributes to price discovery by providing information about current
interest rates and credit conditions within the economy. This information is vital for
investors making decisions about where to allocate their capital and helps ensure that
resources are allocated efficiently across different sectors.

BENEFITS OF MONEY MARKET

Regulatory oversight.
Money markets are subjects to regulatory oversight that helps ensure transparency and
stability within this sector, providing additional confidence for investors regarding the
safety and reliability of their investments.
Accessibility.
Money markets are accessible to both individual investors and institutions. Many banks
offer money market accounts with relatively low minimum balance requirements,
allowing a broad range of investors to participate in this segment of the financial market.

Inflation hedge.
Although money market returns may not always keep pace with inflation over long
periods, they can serve as temporary hedge against inflationary pressures during times
when interest rates rise
Interest rate sensitivity.
Money market instruments tend to respond quickly to changes in interest rates set by
central banks (like the federal reserve). This allows investors to adjust their strategies
based on prevailing economic conditions.

pg. 24
Diversification.
Investing in money market funds allows investors to diversify their portfolios without
making on significant risk. These funds typically invest in variety of short-term debt
instruments, which can help mitigate risks associated with individual securities.
Accessibility.
Money markets are accessible to both individual investors and institutions. Many banks
offer money market accounts with relatively low minimum balance allowing a broad
range of investors to participate in this segment of financial market.
Higher returns than savings accounts.
Money market accounts often offer higher interest rates compared to traditional savings
accounts. While they may not yield as much as longer term investments like stocks or
bonds, they provide a better return than standard savings options while still maintaining
liquidity.

COMPOSITION OF MONEY MARKET

1) Instruments.
The primary instruments traded in the money market include:
Treasury bills. they are sold at a discount and do not pay interest but provide returns
upon maturity
Commercial paper.
These typically have maturities ranging from a few days to up to 270 days.
Certificates of deposit (CD).
They are insured up to certain limits by federal agencies making them low risk
investments.
Repurchase agreements (Repos).
Short term loans where one party sells securities to another with agreement to
repurchase them at a later date for a higher price.
Banker’s acceptances.
A short-term credit investment created by a non- financial firm and guaranteed by a
bank.

2.PARTICIPANTS:

pg. 25
Various entities participate in the money market:
Central banks.
Institutions like the federal reserve play a crucial role in regulating liquidity and interest
rates through open market operations.
Commercial banks.
They engage in lending and borrowing activities among themselves and with other
financial institutions.
Corporations.
Business utilizes money instruments like commercial paper for short term funding
needs.
Money market funds.
Investments funds that pool money from investors to purchase short term debt
securities, providing liquidity and safety for investors seeking low risk options.

3. MARKET STRUCTURE:
The money market operates through both organized exchanges and over counter
markets. Transactions can be conducted directly between parties through brokers who
facilitate trades.

4. REGULATORY FRAMEWORK:
The money market is subject to regulations imposed by governmental bodies such as
securities and exchange commission, which oversees certain aspects of trading
practices to ensure transparency and protect investors.

5. IMPORTANCE:
The money market serves several critical functions within the economy.
-It provides liquidity for business needing quick access to cash.
-It helps central banks implement monetary policy effectively by influencing interest
rates.
-It offers investors safe places to park their funds temporarily while earning some return.

pg. 26
In conclusion, the money market serves as a vital component of the broader financial
system by providing mechanisms for managing short term funding needs and the
composition which encompasses various financial instruments of global finance.

MARKETING RESEARCH PROCEDURE (BY LINDA)

1. Define your research objectives:

What do you want to learn from your research? Are you trying to launch a new product?
Enter a new market? Improve your existing marketing campaigns? Start by clearly
defining the goals and objectives of your market research. Identify the specific
information you need to gather, such as understanding customer needs, evaluating
market potential, or assessing competitor strengths and weaknesses. Once you know
your objectives, you can start to develop a research plan and ensure relevant results.
2. Identify your target audience:
Define your target audience to ensure that your research efforts are focused on the right
demographic. But, as Hot Jar recommends, don't worry too much about typical
demographic questions like age or background. Instead, focus on the role these people
play (as it relates to your product) and their goals.
Understanding your potential customers' characteristics, preferences, and behaviors will
help tailor your research questions and methods to gather the most relevant
information. The more you know about your target audience, the better you can tailor
your research to their needs and interests.
3. Choose your research methods:
There are many different ways to conduct market research, including surveys,
interviews, focus groups, and online research. Is important to use a mix of quantitative
and qualitative research methods.
Choose the methods that are most likely to obtain accurate and actionable data.
Consider factors such as budget, time constraints, and the nature of the information you
seek when choosing the best method for your research.
4. Collect Data:

pg. 27
Market research is only as good as the information it collects, as Survey Monkey says.
Consider using multiple channels to reach a wider audience. Ask clear and concise
questions, and ensure your sample size is large enough to be statistically
representative. Also, remember to record all the information obtained, which you'll come
back to if you'd like to emphasize a point or recall some missed information.

5. Analyze Data:
With the data in hand, the stage is set to translate numbers into knowledge. Use
statistical tools, charts, and graphs to visualize trends and patterns. Interpret the results
in the context of your research objectives and draw actionable conclusions. Look for
patterns and trends, and extract meaningful insights.

6. Stay Updated on Industry Trends:

Market conditions are dynamic, and staying informed about industry trends is essential.
Regularly update your market research to reflect changes in consumer behavior,
technological advancements, and competitive landscapes. This ongoing monitoring
ensures that your business remains adaptable and responsive to market shifts.
7. Implement Findings:
The ultimate goal of market research is to inform strategic decision-making. Implement
the insights gained from your research into your business strategies, marketing
campaigns, and product development. Regularly revisit and update your market
research to stay ahead of market changes.
8. Monitor and adjust.
The market is constantly changing, so it's important to monitor your research findings
and adjust your strategy as needed. The implementation team must have all the
necessary skills to pivot the strategy and experiment with different tactics to see what
connects best with your target audience.
9. Take action.

pg. 28
 Don't let your research report collect dust! It's where the valuable insights you've
gathered become tangible improvements and growth for your business. Use your
findings to make informed decisions.

This could mean developing new products, entering new markets, or changing your
marketing strategy. Remember, taking action doesn't always mean dramatic changes. It
can involve subtle adjustments like modifying your website copy to speak directly to
your target audience's pain points or offering a discount or promotion to incentivize a
desired behavior.
The key is to be strategic and intentional in your actions, aligning them with your
research findings and goals.
10. Choose the right timing.
The timing of your research can be important. For example, if you're doing research for
a new holiday product, you'll want to start your research early in the year. You need to
consider factors like the seasonality of your product, the economic climate, competitor
activity, and internal factors happening within your company.

THE EFFECTS OF MARKING RESEARCH PROCEDURES CAN INCLUDE:

Improved student learning

Marking schemes can support instruction, strengthen assessment, and improve program
quality.

Decreased student complaints

Marking schemes can reduce student complaints about grades.

Challenges.

Teachers and students may face challenges setting performance levels in a marking
scheme.

Marker variation.

pg. 29
The marker's approach to the marking process, workload, experience, and the documentation
available to them can all impact marker variation.

Time constraints.

Time constraints imposed on the return of grades to students can impact the marking
process.

Online systems.

Online systems like Turnitin can impact a marker's ability to enhance the validity and reliability
of assessment marking.

Complexity of documentation.

The complexity of assessment rubrics and associated documentation can impact the marking
process.

BENEFITS OF HAVING RESEARCH PROCEDURE

Here are some benefits of having a research procedure:

Clarity.

A research procedure provides a clear framework for conducting research, which helps
researchers plan, organize, and execute their work.

Quality.

A research procedure helps ensure that the data collected is relevant, reliable, and valid. It
also helps researchers avoid errors, biases, and ethical issues.

Transparency.

A research procedure helps researchers report and communicate their findings in a

transparent and accurate way.

Advancement of knowledge.

A research procedure helps researchers contribute to the existing body of knowledge in their
field.

pg. 30
Replication.

A research procedure provides other researchers with enough information to replicate the
research.

Explanation.

A research procedure allows researchers to explain their approach to their research,

especially if they receive criticism.

Efficiency.

A research procedure helps researchers work more efficiently and in a more focused way.

THE RESEARCH PROCESS.

Research Process: Definition & Steps | Study Smarter.

The research process is important because it can help to bring your research to the highest
possible standard. The research process

What Is Research Methodology? (Why It's Important and Types).

20 Sept 2024 — A research methodology gives research legitimacy and provides scientifically
sound findings. It also provides a detail.

Research Methodology and Its Importance - Space Studies.

Research methodology is important for several reasons. First, it provides a clear and logical
framework for conducting and evaluate...

CHARACTERISTICS OF MARKING RESEARCH PROCEDURES.

It is a planned process that involve of gathering, analyzing, and interpreting information about a
market, including information about the target audience, competitors and overall industry.

pg. 31
Marketing research procedures involve the systematic collection, recording, and analysis of
data related to marketing products. Some characteristics of marketing research procedures
include:

Data analysis.

An essential skill for marketing, data analysis involves gathering and tracking large amounts of data.

Competitive analysis.

A vital part of market research, competitive analysis helps identify strengths and weaknesses relative
to competitors.

Market segmentation.

Identifying consumer segments helps set up and improve marketing strategies.

Secondary research.

An integral part of a market research plan, secondary research can provide insights into the market,
industry, and trends without the need to do the research oneself.

Target group analysis.

An important tool in market research, target group analysis helps define a target group.

Research plan.

Outlines sources of existing data, research approaches, contact methods, sampling plans, and
instruments.

Marketing research forms the foundation of a marketing plan and sets the direction for achieving a
company's goal

QUALITATIVE RESEARCH METHODS.

Qualitative research involves getting relevant data through open-ended communication.

Businesses generally use this method to discover the exact motivations behind the public's

pg. 32
actions, with the purpose of increasing interest in the goods and services they sell. Some
popular types of qualitative business research are:

Focus groups.

This type of business research involves selecting a specific group of people and assessing
their behavior and feedback regarding certain products or services. Companies typically
choose people who fit the characteristics of their target audience to participate in focus groups
and ask them open questions to determine how they can improve customer satisfaction.

Interviews.

This kind of research generally involves a smaller number of subjects than focus groups. The
subjects also receive open-ended questions regarding a company's goods and services, with
the main difference being that interviews are more conversational than focus groups.

Case study research.

This type of business research aims to assess customer satisfaction by discovering the main
challenges that customers face when buying or using a specific product or service. Their
purpose is to help company stakeholders gain a better understanding of the respective issues
so they can provide effective solutions.

Ethnographic research.

This involves the researcher attempting to understand the target audience's culture and
behavior toward the company's products and services by adapting to their environment. It's
typically challenging and time-consuming but can help an organization's stakeholders
understand their customers' thought processes.

Website visitor profiling: This type of business research is relatively new and involves using
surveys to collect data from people visiting the company's website. It can help a business
understand their target audience's interaction with their website and assess their online
presence.

Quantitative research methods.

Quantitative business research methods are those that rely on large amounts of data and use
various statistical and mathematical techniques to draw relevant conclusions from it. They

pg. 33
usually involve a data collection phase and a data analysis phase. Some common types of
quantitative business research are:

Surveys.

This type of business research involves asking a specific set of questions to a large number of
potential and existing customers. Companies conduct surveys both online and offline and use
the resulting data to improve their decision-making processes.

Causal-comparative.

This kind of research involves comparing two situations to analyze how distinct variables can
influence their outcome. It usually requires an independent variable and a dependent variable,
with the research aiming to assess how the former influences the latter.

Correlational.

This type of business research uses mathematical analysis techniques to analyze how two
separate entities influence each other. Companies generally use it to understand how some of
their actions influence their business outcome.

Experimental.

This involves conducting experimental research with the purpose of proving or disproving a
certain theory. Companies use it to assess various hypotheses regarding ways to improve their
profits by carrying out experiments and observing their results.

Online and literature.

This type of business research involves gathering information from online and offline
publications with the purpose of gaining in-depth knowledge regarding a specific subject.
Companies generally use it to understand specific markets or customer behaviors.

Conclusion.

The research process involves several steps that make it easy to complete the research successfully.
The steps in the research process described above depend on each other, and the order must be kept.
So, if we want to do a research project, we should follow the research process steps.

pg. 34
 PARTICIPANTS

NAMES :INDEX NUMBER

OMARA LAWRENCE :2024/AUG/NCBA/C236184.

:(primary market and secondary market).

RIO DAVID ARUK :2400103193.

:(features of developed money market).

ARVUGA SAMUEL LINDA :2024/AUG/NCBA/C236512/DAY.

:(marketing research procedures).

KABHANG SHARON :2024/AUG/NCBA/C236388/DAY.

:(financial market).

NASSUNA KAREN JOYCE :2024/AUG/NCBA/C236230

REFERENCES:

pg. 35
CHATON AI, META AI, HUMBOT App.
https://www.scribd.com/document/76413814/A-Developed-Money-Market#sdebar.
Fabozzi, Frank J. Hand book of mortgage securities. McGraw hill education, 2018
Allen, Franklin, and Douglas Gale. Comparative financial systems. MIT press.
Black, Fisher, et al. Investments.10th ed, McGraw Hill education ,2018.
Tuckman, Bruce A and Angel Serrat, Fixed income securities, 3rd ed, Wiley finance,
2011.
www.iAsk.ai.

pg. 36