SUBMITTED TO : MA’AM MEHWISH AZIZ

NAME: ASAD KHAN

FATHER NAME: SARFRAZ KHAN

MIS ID # 29674

SEMESTER: BBA-6TH

SECTION: “A”

SUBJECT: FINANCIAL MANAGEMENT

EMAIL: ASADKHAN 106681@GMAIL.COM

DATE: 20-10-22

ASSIGNMENT NO 01.
Q 1 : DEFINE THE FOLLOWING
FINANCE, FINANCIAL MANAGEMENT, FINANCING DECISION AND INVESTING DECISION ASSET
MANAGEMENT DECISION, DIVIDEND POLICY, RETAINED EARNINGS, INTEREST, DIVIDENDS,
EXPENSES, REVENUES, DEBT FINANCING AND EQUITY FINANCING, BONDS, SHARES, LOANS,
FINANCIAL SYSTEM, FINANCIAL INSTRUMENTS, INITIAL PUBLIC OFFERINGS (IPO), PRIVATE
PLACEMENT, RIGHT ISSUES, EXCHANGE/ AUCTION MARKET, OVER THE COUNTER MARKET, BROKERS
AND DEALERS, DERIVATIVES MARKET, INVESTMENT BANKING HOUSE(IBH),FORWARD CONTRACT,
FUTURE CONTRACT, OPTIONS AND SWAPS.
ANSWER.
FINANCE: Finance Is Defined As The Management Of Money And Includes Activities Such As Investing,
Borrowing, Lending, Budgeting, Saving, And Forecasting.
FINANCIAL MANAGEMENT: Financial Management Means Not Only Managing A Company’s Finances But
Managing Them With The Intention To Succeed—That Is, To Attain The Company’s Long-Term Goals And
Objectives And Maximize Shareholder Value Over Time.
FINANCING DECISION: Financing Decisions Refer To The Decisions That Companies Need To Take Regarding
What Proportion Of Equity And Debt Capital To Have In Their Capital Structure.
INVESTING DECISION: The Investment Decision Relates To The Decision Made By The Investors Or The Top Level
Management With Respect To The Amount Of Funds To Be Deployed In The Investment Opportunities.
Assets Management Decision: Asset Management Is The Practice Of Increasing Total Wealth Over Time By
Acquiring, Maintaining, And Trading Investments That Have The Potential To Grow In Value. The Managing Of
Money For Investment So That It Makes As Much Profit As Possible, For A Financial Institution Or For Another
Person Or Organization.
Dividend Policy: The Dividend Policy Is A Financial Decision That Refers To The Proportion Of The Firm’s
Earnings To Be Paid Out To The Shareholders.
Retained Earnings: Retained Earnings Are The Amount Of Profit A Company Has Left Over After Paying All Its
Direct Costs, Indirect Costs, Income Taxes And Its Dividends To Shareholders.
Interest: Interest Is The Fee A Business Pays A Lender (Creditor) To Borrow Money. Interest is most often reflected
as an annual percentage of the amount of a loan.
DIVIDENDS: A Dividend Is The Distribution Of A Company's Earnings To Its Shareholders And Is Determined By
The Company's Board Of Directors.
EXPENSES: Expenses Are The Costs That The Company Has To Pay In Order To Generate Revenue
REVENUES: Revenue Is The Total Amount Of Income Generated By The Sale Of Goods And Services Related To
The Primary Operations Of The Business.
DEBT FINANCING: When A Company Borrows Money To Run Business And To Be Paid Back At A Future Date
With Interest It Is Known As Debt Financing.
EQUITY FINANCING: Equity Financing Is The Process Of Raising Capital Through The Sale Of Shares. Either To
Your Existing Shareholders Or To A New Investor.
BONDS: A Bond Is Simply A Loan Taken Out By A Company. Instead Of Going To A Bank, The Company Gets
The Money From Investors Who Buy Its Bonds.
SHARES: A Percentage Of Ownership In A Company Or A Financial Asset
LOANS: A Loan Is A Sum Of Money That An Individual Or Company Borrows From A Lender.
FINANCIAL SYSTEM: A Financial System Is A Collection Of Institutions Which Allow The Exchange Of Funds,
Such As Banks, Insurance Companies, And Stock Exchanges. The Financial System Exists In The Corporate,
National, And Global Level.
FINANCIAL INSTRUMENTS: Financial Instruments Are Monetary Contracts Between Parties. They Can Be
Created, Traded, Modified And Settled.
INITIAL PUBLIC OFFERINGS (IPO): An Initial Public Offering (IPO) Refers To The Process Of Offering Shares
Of A Private Corporation To The Public In A New Stock Issuance For The First Time. An IPO Allows A Company
To Raise Equity Capital From Public Investors.
PRIVATE PLACEMENT: A Sale Of Stocks, Bonds, Or Securities Directly To A Private Investor, Rather Than As
Part Of A Public Offering.
RIGHT ISSUES: Right Issues Is An Invitation To Existing Shareholders To Purchase Additional New Shares In The
Company.
EXCHANGE: Is A Marketplace Where Securities, Commodities, Derivatives And Other Financial Instruments Are
Traded.
AUCTION MARKET: Is A Market Where The Price Is Determined By The Highest Price The Buyer Is Willing To
Pay (Bids), And The Lowest Price The Seller Is Willing To Take (Offers).
OVER THE COUNTER MARKET: The Over-The-Counter (OTC) Market Refers To The Trading Of Securities
Outside Of A Formal Exchange, Usually In A Broker-Dealer Network .
BROKERS: Broker Is An Individual Or Firm Who Acts As An Intermediary Between A Buyer And Seller
DEALERS: Dealer Is Any Person In The Business Of Buying And Selling Securities For His Or Her Own Account,
Through A Broker Or Otherwise.
DERIVATIVES MARKET: Derivative Market Is A Contract Between Two Parties Which Derives Its Value/Price
From An Underlying Asset
INVESTMENT BANKING HOUSE(IBH): Investment Banking Is A Special Segment Of Banking Operation That
Helps Individuals Or Organizations Raise Capital And Provide Financial Consultancy Services To Them.
FORWARD CONTRACT: Customized Contract Between Two Parties To Buy Or Sell An Asset At A Specified Price
On A Future Date.
FUTURE CONTRACT: Future Is A Contract To Buy Or Sell An Underlying Stock Or Other Asset At A Pre-
Determined Price On A Specific Date
OPTION CONTRACT: Options Contract Gives An Opportunity To The Investor The Right But Not The Obligation
To Buy Or Sell The Assets At A Specific Price On A Specific Date, Known As The Expiry Date.
SWAP: Swap Is An Agreement Between Two Counterparties To Exchange Financial Instruments Or Cash flows Or
Payments For A Certain Time.
Q 2 : DEFINE FINANCIAL MARKETS? EXPLAIN ITS VARIOUS TYPES.
ANSWER.
FINANCIAL MARKET.
A Financial Market Is A Word That Describes A Marketplace Where Bonds, Equity, Securities, Currencies Are
Traded. It Acts As A Platform For Sellers And Buyers To Connect And Deal In Their Desired Financial Assets At A
Price Determined By Market Forces. In A Financial Market, The Stock Market Allows Investors To Purchase And
Trade Publicly Companies Share.

TYPES OF FINANCIAL MARKET:

PRIMARY MARKET VS SECONDARY MARKET.

PRIMARY MARKET.
The Primary Is Also Known As The New Issue Market Primary Market Refers To The Market In Which Securities
Are Created For First-Time. The Buying And Selling Of Shares Takes Place Among The Investors And The
Companies. An Initial Public Offering, (IPO) Is An Example Of A Primary Market.
SECONDARY MARKET.
The Secondary Market Is Where Investors Buy And Sell Securities They Already Own. The Secondary Market Is
Defined As A Place Where The Issued Shares Are Traded Among Investors. It Is Also Known As Afterwards
Market.
MONEY VS CAPITAL MARKET.

MONEY MARKET:
Deals With Financial Assets And Securities, Its Short Term Market, Its Maturity Is Only One Year And Security Is
Traded Only For One Year And No Physical Location Like It Is Online Working.
FEATURES:

 Meet Temporary Shortage Of Funds

  Monetary Assets Of Short Term Nature
CAPITAL MARKET:
It Is A Place Where Money Is Exchanged Between Who Excess Of It To Those Who Have In Deficit. It Deals With
Long Term Markets More Than One Year And Security Is Traded For More Than One Year And It Has Physical
Location.
CAPITAL MARKET INSTRUMENTS:

 Equity
 Credit Market
 Insurance Instrument

SPOT VS FUTURE MARKET.

SPOT MARKET.
Spot Market Is Defined In Finance As A Contract Of Buying And Selling Commodity On The Spot Known As Spot
Market In Spot Market The Receipt And Payment Is Made Immediately That’s Why It’s Called As Spot Market. It’s
Also Known As Cash Market.
FUTURE MARKET:
A Futures Market Is A Financial Marketplace Where Participants Trade Futures Contracts For Commodities, Stock
Indices, Currency Pairs, And Interest Rates At A Pre-Determined Rate And Agreed-Upon Future Date. It, Thus,
Protects Investors And Traders From Losing Money On A Transaction Even If The Price Of The Commodity Or
Financial Instrument Rises Or Falls Later. It Is Also Known As Future Exchange.
Q 3 : DEFINE FINANCIAL INTERMEDIARIES ? EXPLAIN ITS VARIOUS TYPES.
ANSWER.
FINANCIAL INTERMEDIARIES.
Financial Intermediaries Are The Financial Institutions That Brings Together Both Saver And Borrower Meaning
That These Institution Obtains Funds From The Surplus Units And Provide To Deficit Sectors. It’s Serves As A
Middle Man Between Among Diverse Parties In Order To Facilitate The Final Transactions. Example, A Bank That
Transforms Bank Deposits Into Bank Loans.

THE PRIMARY ROLE OF THESE INSTITUTION ARE :

 Taking Deposits From The Savers And Lending The Money To The Borrower.
 Investing Savings Of The Money In A Variety Of Stocks, Bonds And Other Financial Assets.
 Making Loans To Small Businesses And Consumers.

TYPES OF FINANCIAL INTERMEDIARIES.

BANKS
Banks Are The Most Popular Financial Intermediaries. Both Commercial As Well As Central Banks
Serves As Financial Institution By Facilitating Borrowing And Lending On A Widespread Scale. Banks
Are Types Of Financial Intermediaries That Facilitate The Transaction Between Lenders Who Want To
Save And Borrowers Who Need Financing For Their Projects. Banks Are A Very Commonly Used
Type Of Financial Intermediaries.

CREDIT UNIONS
Similar To The Banking Sectors, Credit Unions Also Bring Together People Who Need Money And
Those Who Have It. For Instance, They Are Known To Offer Credit Terms To People By Using The
Money That Other Individuals Deposited Into Savings Accounts. So, When Somebody Needs A Loan
From A Credit Union, They Will Receive It Because There Are Funds At Credit Union’s Disposal That
Someone Else Contributed. The Main Difference Between These Entities And Typical Banks, However,
Is Their Role With Consumer Credit. Besides Lending, They Also Oversee Many Credit-Related
Inquiries.

MUTUAL FUNDS
Mutual Funds Use The Money They Collect From Investors Through Selling Shares Of The Mutual
Fund To Invest In A Large Number Of Companies And Build A Diversified Portfolio. When The
Mutual Fund Profits, The Profit Is Distributed Amongst All Of The Investors Who Have Placed Their
Money In A Mutual Funds.

FINANCIAL ADVISORS
A Financial Advisor Is A Financial Intermediary Who Is Responsible For Executing Trades On Behalf
Of Their Clients. Financial Advisors Use Their Expertise To Achieve The Financial Goals Of Clients.
Investment Advice Is An Important Reason To Work With Financial Advisors, But They Also Assist In
Every Aspect Of Financial Life. They Also Assist Their Clients In Other Areas Like Budget, Savings,
Insurance, And Tax Strategies.

INSURANCE COMPANIES
Insurance Companies Offer Various Types Of Insurance Policies To Offer Financial Protection. For
Example, Insurance Companies Often Sell Products Such As Life, Health, And Home Insurance. They
Put The Money That Comes From Insurance Premiums Into A Pool To Fund The Policy Coverage.

PENSION FUNDS
Full-Time Employees Often Meet Another Popular Financial Intermediary Known As A Pension Fund.
Pension Funds Are Financial Intermediaries Which Offer Social Insurance By Providing Income To The
Insured Persons Following Their Retirement. Often They Also Provide Death And Disability Benefits.
For Instance, When Somebody Signs Up For A Pension Fund, They Choose How Much Of Their Salary
Will Be Put Away. Often, Their Employer Matches That Contribution To A Certain Extent. Then, All
Of That Money Is Used To Purchase Assets That Will Grow And Have A Good Yield. Once The
Employee Retires, They Get All The Contributions Alongside Any Interest And Realized Gains.

STOCK EXCHANGES
Another Financial Intermediary Is A Stock Exchange That Acts As A Market Where Stock
Buyers Connect With Stock Sellers. The Stock Exchange Acts As A Large Platform That
Facilitates Every Transaction Of People. Like Other Financial Intermediaries, They Earn
Revenues By Adding Transaction Fees And Interest Rates.