3.  THE ECONOMIC DEVELOPMENT OF ANY
COUNTRY DEPENDS UPON THE EXISTENCE
OF WELL ORGANISED FINANCIAL SYSTEM.
 IT IS THE FINANCIAL SYSTEM WHICH
SUPPLIES THE NECESSARY FINANCIAL
INPUTS FOR THE PRODUCTION OF GOODS
AND SERVICES AND THERE BY PROMOTING
THE WELL BEING AND STANDARD OF LIVING
OF THE PEOPLE OF A COUNTRY.
 THUS THE FINANCIAL SYSTEM IS A BROADER
TERM THAT INCLUDES FINANCIAL
MARKETS AND FINANCIAL INSTITUTIONS
WHICH SUPPORT THE SYSTEM.

4.  THE MAJOR ASSETS TRADED IN THE
FINANCIAL MARKET ARE MONEY AND
MONETARY ASSETS.
 THE RESPONSIBILITY OF THE FINANCIAL
SYSTEM IS TO MOBILISE THE SAVINGS IN
THE FORM OF MONEY AND MONETARY
ASSETS AND INVEST THEM INTO
PRODUCTIVE VENTURES.
 AN EFFICIENT FUNCTIONING OF THE
FINANCIAL SYSTEM FACILITATES THE FREE
FLOW OF FUNDS TO MORE PRODUCTIVE
ACTIVITIES AND THUS PROMOTES INVEST
MENT.

5.  THUS THE FINANCIAL SYSTEM PROVIDES
THE INTERMEDIATION BETWEEN SAVERS
AND INVESTORS AND PROMOTES FASTER
ECONOMIC DEVELOPMENT.

7.  IN FINANCIAL LANGUAGE MONEY AND
MONETARY ASSETS ARE REFERRED TO AS
LIQUIDITY.
 THE TERM LIQUIDITY REFERS TO CASH OR
MONEY AND OTHER ASSETS WHICH CAN
BE CONVERTED INTO CASH READILY
WITHOUT LOSS OF VALUE AND TIME.
 RBI, Commercial Banks – credit creation

8.  MOBILISE SAVINGS AND CHANNELISE
THEM INTO PRODUCTIVE ACTIVITIES.
 TO ATTRACT SAVINGS FINANCIAL
SYSTEM PROVIDES INCENTIVES.

10.  I. FINANCIAL ASSETS
 II. FINANCIAL INTERMEDIARIES.
 III. FINANCIAL MARKETS.
 IV. FINANCIAL RATES OF RETURN
 V. FINANCIAL INSTRUMENTS.

11.  BASIC PRODUCT OF FINANCIAL SYSTEM IS
– FINANCIAL ASSET.
 A FINANCIAL ASSET IS ONE WHICH IS
USED FOR PRODUCTION OR
CONSUMPTION OR FOR FURTHER
CREATION OF ASSETS. FOR Eg. Equity
shares.
 Diff. PHYSICAL ASSETS

12.  I. MARKETABLE ASSETS
 II. NON MARKETABLE ASSETS.

13. MARKETABLE ASSETS ARE THOSE WHICH
CAN BE EASILY TRANSFERRED FROM ONE
PERSON TO ANOTHER WITHOUT MUCH
HINDRANCE. Eg: SHARES , BONDS ,
M.F.,UTI Units, Govt. Securities etc.

14.  IF THE ASSETS CANNOT BE TRANSFERRED
EASILY, IT CAN BE SAY THAT NON
MARKETABLE ASSETS.
 Bank Deposits, P.F., LIC Schemes, P.O.
Certificates.

15.  CASH ASSET
 DEBT ASSET
 STOCK ASSET.

17.  THE TERM FINANCIAL INTERMEDIARIES
INCLUDES ALL KINDS OF
ORGANISATIONS WHICH INTERMEDIATE
AND FACILITATE FINANCIAL
TRANSACTIONS OF BOTH INDIVIDUAL
AND CORPORATE CUSTOMERS.
 THEY MAY BE IN THE ORGANISED SECTOR
OR IN THE UNORGANISED SECTOR.

18.  1. DEVELOPMENT BANKS
 2. INSURANCE COMPANIES (LIC & GIC)
 3. UTI
 4. AGRL. FINANCING INSTITUTIONS
 5. GOVT. (PF, NSC)
 6. EXIM BANK
 7. NBFC (Hire Purchase, Leasing Co.etc.)

19.  1. RBI
 2. COMMERCIAL BANKS
 3. CO-OP. BANKS
 4. P.O. , TREASURY BILLS Etc.

20.  There is no specific place or location to indicate
financial market. What ever financial
transactions takes place, it is deemed to have
taken place in the financial market.
 However financial market can be referred to as
those centres and arrangements which facilitate
buying and selling of financial assets, claims
and services.

21.  1. MONEY LENDORS
 2. INDIGENOUS BANKERS
 3. PAWN BROKERS
 4. TRADERS AND LAND LORDS.