Question

Write down the functions and components of a financial system.

Answer 1

It is a system of money transfer.

Functions of the financial system:

1. It connects savers and investors.
2. It helps in inspiring the operators to monitor investment performance.
3. It provides available price and its related information.

Components of the financial system:

The components of the financial system are as follows:

1. Financial Institutions:                   
         It facilitates smooth working of the financial system by making investors and borrowers meet.

2. Financial Markets:                       
          It is basically a market used for exchanging financial assets. It is a link between savers and investors.

3. Financial Instruments (Assets or Securities):                       
              It includes the transfer of assets like cash and receiving money.

4. Financial Services:
                         These are the services which are used to get essential funds and successfully deployed them.

5. Money:           
           It is a thing used to buy something or to sell something.

Answer 2

A financial system alludes to a framework which empowers the exchange of cash amongst financial specialists and borrowers.

Five Basic Components of Financial System

Money related Institutions:

Money related organizations encourage smooth working of the monetary framework by influencing speculators and borrowers to meet.

Money related Markets:

A money related market is where monetary resources are made or exchanged.

Financial Instruments (Assets or Securities):

The items which are exchanged a budgetary market are monetary resources, securities or another kind of money related instruments.

Financial Services:

Money related administrations comprise of administrations given by Asset Management and Liability Management Companies.

Cash:

Cash is comprehended to be anything that is acknowledged for an installment of items and administrations or for the reimbursement of debt.