Capital Market Overview

Study Notes

Prepare financial statements, business activity reports, and forecasts
Monitor financial details to ensure legal requirements are met
Supervise employees who do financial reporting and budgeting
Review company financial reports and seek ways to reduce costs
Analyze market trends to find opportunities for expansion or for acquiring other companies
Help management make financial decisions

A marketplace where creation and trading of financial assets, such as shares, debentures, bonds, derivatives, currencies, etc. take place
Plays a crucial role in allocating limited resources in the country's economy
Acts as an intermediary between savers and investors by mobilizing funds between them
The Malaysia financial market is governed and regulated by the Bursa Malaysia or the Malaysia stock exchange

Exists as a result of the interaction between the suppliers and demanders of short-term funds (less than 1 year)
Most transactions are made in marketable securities which are short-term debt instruments such as T-bills and commercial paper
Transactions can be executed directly or through an intermediary

A market that enables suppliers and demanders of long-term funds to make transactions
Key securities are bonds (long-term debt) and both common and preferred stock (equity)
Bonds are long-term debt instruments used by businesses and government to raise large sums of money or capital
Common stock are units of ownership interest or equity in a corporation

The market that facilitates the issuance of new securities
The first offering of stock to the public is referred to as an Initial Public Offering (IPO)

Financial institutions that channel the savings of individuals, business, and government into loans or investment
Key suppliers and demanders of funds are individuals, business, and government
Individuals are net suppliers of funds, while business and governments are net demanders of funds

Definition: Finance is a field concerned with the allocation (investment) of assets and liabilities over space and time, often under conditions of risk or uncertainty
Also referred to as the art and science of managing money or fund
Finance refers to 2 main activities: (a) actual process of attracting money, (b) management of the fund

Concerns on the creation and maintenance of economic value or wealth of a firm
Focuses on the process of planning and managing a firm's long-term investment and also the mixture of debt and equity maintained by a firm

Investment is an asset or item that is being purchased with the hope that it will generate income or appreciate in the future
In an economic sense, an investment is the purchase of goods that are used to create wealth in the future
In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future
Insurance is a contract in which an individual or entity receives financial protection or reimbursement against losses from an insurance company