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Lecturer No. 12

THE MARKET

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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).

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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.

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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 boughtand 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.

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Kinds of Market

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

a). Commodity Market

b). Capital Market

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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:

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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.

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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.

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COMMODITY MARKET:

iii) Bullion Market is a market to sell precious

metals, e.g., gold, silver, etc. Karachi Bullion

Exchange, London bullion Exchange etc.

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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:

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CAPITAL MARKET:

i) Money Market:

This market provides short-term finances to the

commercial and business concerns. It is that financewhich 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, co-

operative societies, and factors.

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CAPITAL MARKET:

ii) Foreign Exchange Market:

This market deals in foreign exchange. Foreign

exchange refers to that system by which commercialnations 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.

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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.

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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.

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MARKET REPORT

Advantages:

It is an index of price.

It provides statistics for comparison.

It shows true nature and volume of

business transacted.

It shapes public opinion.

It tends to stabilize prices.

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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.

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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.

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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.