Page 55 - Introduction To Investment Management

Summary:

▪ Financial markets can be divided into Money Market, Capital Market
and Derivatives Market.

▪ Money Market basically consists of the securities or financial
instruments that are short-term nature, low risk and marketable. The

instruments are T-bills, NCD, Bankers’ Acceptance, Repo and Reverse
etc.

▪ Capital Market instruments such as bond and stock relatively exposed
to the highest risk and offers higher rate of return than money

markets.
▪ Derivatives markets can be described as where a financial instrument

is pegged to the value of an asset or commodity basis. Therefore, the
return on this investment is depending on the performance of the

movement of underlying asset price. The basic instruments in the
Derivatives Market are the Option, Forward and Futures.

▪ Initial Public Offerings (IPOs) is referring to the process of selling stock
by a private company to the public at the first time to access for

additional capital to expand their business. IPO also known as ‘going
public’.

▪ Underwriting firm, which is investment bank, which helps the
company to determine what type of security to issue (common or

preferred) and propose the best offering price and the right time

for the shares to enter the market.
▪ Bursa Malaysia currently operates two different counters for stock
trading called Ace Market and Main Market.

Discussion:

1. Differentiate between Money Market, Capital Market and Derivatives Market?

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