Page 23 - Introduction To Investment Management

2.1 INTRODUCTION

In accordance to understand on types of market and financial instrument, we must

familiarise with the term of financial system. A Financial system can be defined as a set of
institutional units and markets that play a role in mobilizing funds for investment by

providing facilities in a complex commercial activity. To simplify the understanding, the
figure as follows will illustration the big picture of financial system.

Table 2.1: The Components of Financial System

Financial
System

Financial Financial Financial
Markets Institutions Users/Clients

Banking
Money Market Household
Institutions

Non-banking Corporate
Capital Market
Institution Sectors

Derivatives Government
Market

Offshore
Market

2.2 TYPES OF MARKET AND FINANCIAL INSTRUMENTS

Financial markets can be divided into three main categories: - Money Market, Capital
Market and Derivatives Market in which there are various fractions of assets based on

level of the risks, the period of maturity and different characteristics.

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