Financial Markets and Services: Introduction and Overview

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Financial Markets and Services (FMS)

Lecture 1 Introduction and Overview of Financial System

Module Objectives:
This module examines the role of the financial markets, its players and the instruments on the economy and the status of Singapore as a financial centre. The module will also trace the relationship between the various markets and its participants with emphasis given to current events, trends and development in the markets.

Module Assessment
Module Schedule of topics (Appendix 1)
Coursework Components (Appendix2) including Project Outline/ Plagiarism Form/Peer Assessment

Reference Text:
Financial Markets and Institutions in Singapore
Tan Chwee Huat 11th edition Singapore University Press

Other Sources:
Web sites of financial institutions, IBF, MAS, SGX, Investopedia, Wikidpedia and other finance sites.

Module Leader/Lecturer/tutors:

Name
Telephone Numbers
E-mail
Module Leader & tutor
Mrs. Tay Gek Huan
64606953 / 97830378
tgh8@np.edu.sg
Tutor
Mr. Chong Kek Weng
64606910
ckw1@np.edu.sg
Tutor
Mr. Mark Terence
64606810
tmt3@np.edu.sg
Tutor
Ms Michelle Lim Yun Pei
64606536
lyp3@np.edu.sg

Lecture 1 Objectives
Introduce the economic, financial system and markets
Understand the economic role of financial markets
Understand how funds are transferred

Lecture Outline
1.1Definitions and concept of economic, financial system and markets 1.2 Economic role of financial markets
1.3Two ways of Transfer of funds (direct vs indirect)

1.1 Introduction

Economic and Financial System
Economics
Study of how society decides what gets produced and how, and who gets what. The 2 branches of Economics, _____________ and ___________________________ studies individual decision making units such as households, business firms and aggregate or total behaviour of all households and firms.

Finance
The study of how the ______________ coordinates and channels the flow of funds from lenders to borrowers and vice versa and how new funds are created by financial intermediaries during the borrowing process. Broadly speaking, it studies the ________________and _________________ of the production, spending and lending decisions.

Money
Something acceptable and generally used as payment for goods and services

Surplus Spending Units (SSUs)
Spending Units such as households or firms whose ________________ exceed their ___________________.

Deficit Spending Units (DSUs)
Spending Units such as households or firms whose spendings _________________ their incomes.

Definition and Concept of a Financial Systems
A well organized, efficient, smoothly functioning financial system is an important of a modern, highly specialised economy.

The financial system provides a mechanism of whereby an individual unit that is an SSU may conveniently make available funds to DSUs who intend to spend more than their current income. It is a framework of ________________, _____________and _________ to facilitate the ______________of saved funds from ______________ (savers or SSUs) to _______________ (borrowers or DSUs).

Financial system interposed between ______________ of ______________, ___________________ and financial instruments (financial _________________of savers and financial ___________________ of borrowers).

Exchanges through lending and borrowing made possible by participants’ ____________ __________ ____________ in favour of future consumption.

Total Saving
Household Saving

(income not spent on consumption)

Investment in newly constructed Surplus funds available to
houses be lent in financial markets

Business Saving
(Income not distributed to owners of business firm)

Investment in new capital...
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