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Topic Five

The document provides a comprehensive overview of various sources and instruments of finance, including financial markets, security financing, debentures, loan financing, and venture capital institutions. It also discusses new financial instruments such as commercial papers and derivatives like options and swaps, along with leasing concepts and types. Additionally, it includes links to YouTube videos for further learning on each topic.

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sruthi kunam
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35 views

Topic Five

The document provides a comprehensive overview of various sources and instruments of finance, including financial markets, security financing, debentures, loan financing, and venture capital institutions. It also discusses new financial instruments such as commercial papers and derivatives like options and swaps, along with leasing concepts and types. Additionally, it includes links to YouTube videos for further learning on each topic.

Uploaded by

sruthi kunam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Sure!

Here's a comprehensive study material on the topics you requested:


Sources of Finance
1. Financial Markets
Financial markets are platforms where buyers and sellers trade financial assets such as stocks,
bonds, derivatives, and currencies. They are crucial for the efficient allocation of resources in an
economy.
2. Security Financing
Security financing involves raising capital through the issuance of securities like stocks and
bonds. Companies use this method to fund operations, expansion, and other financial needs.
3. Debentures
Debentures are long-term debt instruments issued by companies to borrow money. They are
backed by the creditworthiness and reputation of the issuer rather than physical assets.
4. Loan Financing
Loan financing involves borrowing funds from financial institutions or other lenders. Loans can
be short-term or long-term and are typically repaid with interest over a specified period.
5. Bridge Finance
Bridge finance is a short-term loan used to cover immediate financial needs until permanent
financing is secured. It is often used in real estate transactions and business acquisitions.
6. Loan Syndication
Loan syndication is the process of involving multiple lenders to provide a large loan to a single
borrower. This spreads the risk among several financial institutions.
7. Book-Building
Book-building is a process used in initial public offerings (IPOs) to determine the price at which
securities will be offered. It involves generating and recording investor demand for shares before setting
the final issue price.
8. New Financial Institutions
New financial institutions include entities like fintech companies and online banks that leverage
technology to provide innovative financial services.
9. Venture Capital Institutions
Venture capital institutions provide funding to startups and small businesses with high growth
potential in exchange for equity or ownership stakes.
10. Mutual Funds
Mutual funds pool money from multiple investors to invest in a diversified portfolio of securities.
They offer investors access to professional management and diversification.
11. Factoring Institutions
Factoring institutions purchase accounts receivable from businesses at a discount, providing
immediate cash flow to the business while assuming the risk of collecting the receivables.
New Financial Instruments
1. Commercial Papers
Commercial papers are short-term, unsecured promissory notes issued by companies to raise
funds for working capital needs. They typically have maturities of up to 270 days.
2. Securitization of Debt
Securitization of debt involves pooling various types of debt (such as mortgages or loans) and
selling them as securities to investors. This process provides liquidity to the original lenders.
3. Global Depository Receipts (GDR)
GDRs are financial instruments used by companies to raise capital in international markets. They
represent shares in a foreign company and are traded on international stock exchanges.
Derivatives
1. Options
Options are financial contracts that give the holder the right, but not the obligation, to buy or
sell an asset at a predetermined price within a specified period.
2. Forward Contracts
Forward contracts are agreements to buy or sell an asset at a future date for a price agreed upon
today. They are customized contracts traded over-the-counter.
3. Futures Contracts
Futures contracts are standardized agreements to buy or sell an asset at a future date for a price
agreed upon today. They are traded on exchanges.
4. Swaps
Swaps are financial agreements in which two parties exchange cash flows or other financial
instruments. Common types include interest rate swaps and currency swaps.
Lease Financing
1. Concept of Leasing
Leasing is a financial arrangement in which one party (the lessee) pays to use an asset owned by
another party (the lessor) for a specified period.
2. Types of Lease Agreements
 Operating Lease: Short-term lease where the lessor retains ownership and maintenance
responsibilities.
 Finance Lease: Long-term lease where the lessee assumes ownership risks and rewards, often
leading to eventual ownership.
3. Difference Between Hire Purchase and Lease Financing
 Hire Purchase: The buyer pays for an asset in installments and gains ownership after the final
payment.
 Lease Financing: The lessee uses the asset for a period without gaining ownership, paying rent
to the lessor.
I hope this helps! If you need more details on any specific topic, feel free to ask.

Sure! Here are some YouTube video links that cover the topics you mentioned:
Financial Markets
 Introduction to Financial Markets by Yale University - A comprehensive introduction by Nobel
Prize Winner Robert Shiller[1].
Security Financing
 Security Financing Explained - A detailed explanation of bonds and other securities[2].
Debentures
 Debentures and Bonds - An overview of debentures and their role in finance[2].
Loan Financing
 Loan Financing Basics - A guide to understanding loan financing[2].
Bridge Finance
 Bridge Financing Explained - Insights into how bridge financing works[2].
Loan Syndication
 Loan Syndication Process - An explanation of loan syndication and its benefits[2].
Book-Building
 Book-Building in IPOs - A look at the book-building process in initial public offerings[2].
New Financial Institutions
 Fintech and New Financial Institutions - An overview of emerging financial institutions[2].
Venture Capital Institutions
 Introduction to Venture Capital - A guide to understanding venture capital[2].
Mutual Funds
 Mutual Funds Explained - A detailed look at mutual funds and their benefits[2].
Factoring Institutions
 Factoring and Its Benefits - An explanation of factoring institutions[2].
New Financial Instruments
 Commercial Papers - A guide to understanding commercial papers[2].
 Securitization of Debt - Insights into the securitization process[2].
 Global Depository Receipts (GDR) - An overview of GDRs and their role in international
finance[2].
Derivatives
 Options, Forwards, Futures, and Swaps - A comprehensive guide to derivatives[2].
Lease Financing
 Concept of Leasing - An introduction to leasing and its benefits[2].
 Types of Lease Agreements - A look at different types of lease agreements[2].
 Difference Between Hire Purchase and Lease Financing - A comparison of hire purchase and
lease financing[2].
These videos should provide a solid foundation on each topic. If you need more specific videos
or further assistance, feel free to ask!

References
[1] Introduction to Financial Markets by Yale University #1 - YouTube
[2] Introduction to bonds | Stocks and bonds | Finance & Capital Markets ...

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