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Lecturer No.

12

THE MARKET

The Market
A market is a place where goods are bought and
sold. It is a place where buyers and sellers meet
each other directly or through agents and
brokers (dealers).

The Market
It bridges the gap and distance between the
buyers and sellers and provides a platform for
buyers to buy their desired goods and sellers to
locate and find buyers.

Nature of Markets
Ready Market
A market may be a ready market where goods are bought and
sold for ready delivery / spot delivery without speculation
(assumption).

Future Market
A market may be a speculative market where goods are bought
and sold for future delivery with a view to gaining through
speculation. Such a market is known as a futures market. The
examples are stock exchanges, cotton exchange, bullion
exchange, jute exchange etc.

Kinds of Market
The following are the kinds of a Market / Economic Market:

a). Commodity Market


b). Capital Market

COMMODITY MARKET:
The first and the well-known type of a market are a

Commodity Market. As the term itself explanatory


(clarifying), it deals in commodity that may be used for
direct consumption or to be utilized for production, e.g.,
rice, wheat, oil-seeds, cotton, leather, gold and silver etc.

The Commodity Market organized in Pakistan may be sub-dividend


into the following:

COMMODITY MARKET:
i) Raw Material Market is a market dealing in
raw produced, e.g., wheat, cotton, iron, etc.
Such market or exchanges are in Karachi
Cotton Exchange, Faisalabad Rubber Exchange
etc.

COMMODITY MARKET:
ii) Manufacturing & Finished Goods Market
is a market to deals in semi-finished goods /
finished goods /

manufactured and partially

manufactured goods, e.g., cotton, cotton yarn,


leather, sugar, flour, etc.

COMMODITY MARKET:
iii) Bullion Market is a market to sell precious
metals, e.g., gold, silver, etc. Karachi Bullion
Exchange, London bullion Exchange etc.

CAPITAL MARKET
The second important type of market is capital market.
Capital is the life blood of an industry. It is required to
start a new business or to expand the old ones. Capital

Market helps to get finance. It is the market of home


currency, foreign exchange and stocks and shares.

Capital Market may be sub-divided into the following:

CAPITAL MARKET:
i)

Money Market:

This market provides short-term finances to the


commercial and business concerns. It is that finance

which is consumed within one year. It is supplied in


form loans payable with in one year, overdraft, letter
of credit, bill of exchange, promissory notes etc. the
sources if such finances are commercial banks, cooperative societies, and factors.

CAPITAL MARKET:
ii) Foreign Exchange Market:

This market deals in foreign exchange. Foreign


exchange refers to that system by which commercial

nations discharge their debts. This market determines


the Balance of Payment and Balance of Trade of a
country. Foreign exchange position will be good if
balance of payment and balance of trade are favorable.

CAPITAL MARKET:
iii) Stock & Shares Market:

This market deals in long-term capital in the following forms:


Share Capital i.e. shares, stocks Long term loans, bonds,
debentures (A bond for acknowledging a debt).

It is an organized market for buying for investments. It facilitates


free movement of stocks and shares from an industry or reign to

another, e.g., Karachi Stock Exchange, Lahore Stock Exchange


etc.

MARKET REPORT
Market Report is the periodical publication of the

conditions or review of the business transacted in a


certain commodity or capital in a particular market.
Such reports may be prepared and published daily,

weekly, fortnightly or monthly etc. in newspaper,


magazine and commercial bulletins.

It gives the opening and closing rates of commodities


(or capital) along-with the reasons for the rising of
falling trend (method) of the market price.

MARKET REPORT
Advantages:

It is an index of price.

It provides statistics for comparison.

It

shows

true

nature

business transacted.

It shapes public opinion.

It tends to stabilize prices.

and

volume

of

MARKET REPORT
Advantages:

It indicates future movement of prices.


It serves as media of advertisement for the
Company(s).

It shows the effect of demand and supply on


market.

It warns (caution) speculators.

It provides valuable commercial literature.

CONTENTS OF A MARKET
REPORT
The usual Contents of a Market Report are as follows:

Date of Business.

Place of Business.

Period under review e.g., day, week, fortnight, month, etc.

Types and qualities of commodities dealt in.

Estimate of demand and supply at the time of reporting.

CONTENTS OF A MARKET
REPORT

Nature of Business transacts, term of delivery and

payment.

Volume of Business i.e., stock available and quantity sold.

Ruling prices for different qualities of commodities at


which transactions were made.

Fluctuation in prices, local and outside factors influencing


the rates.

Remarks of the reporter forecast of business conditions


i.e., prospects of business.