UNIVERSITY OF MAKENI

DEPARTMENT: ECONOMICS

MODULE: APPLIED ECONOMICS

LECTURER NAME: DR. MUSA P. KAMARA

GROUP MEMBERS

NO. NAME ID.N

1. EMMANUEL BONGAY 5488
2. ABDULAI ALPHA 5359
KAMARA
3. ALFRED BRIMA 5587
SANDY
 TABLE OF CONTENT
EQUITY MARKET

Introduction

What is the equity market?

Functions of the equity market

Role of the equity market in economic growth

Investing in the equity market

Summery and conclusion

BOND MARKET

Overview and introduction of bond market

What is bond market?

Functions of bond market in economics

The role of bond market in enhancing economic growth

Investing in bond market

Summery and conclusion

HEDGE FUND AND PRIVATE EQUITY

Overview and introduction of hedge fund and private equity

Hedge fund and private equity

Functions of hedge fund and private equity in economics

The role of hedge fund and private equity in enhancing economic growth

Investing in hedge fund and private equity

Resolution
 EQUITY MARKET

INTRODUCTION:

The equity market is the backbone of an economy as it provides a platform for companies to
raise capital by issuing stocks or shares. These shares represent partial ownership in the company
and are bought and sold on the equity market. A healthy equity market is an essential element of
a thriving economy, as it ensures a steady flow of capital, facilitates economic growth, and
creates job opportunities. This presentation aims to provide a comprehensive overview of the
equity market, its functions, and role in the economy.

WHAT IS THE EQUITY MARKET?

Equity markets, also known as stock markets, are a type of financial market where shares or
stocks of publicly traded companies are bought and sold. These public companies issue shares as
a way of raising capital for their business activities. By issuing shares, the companies allow
investors to become partial owners with a proportional share in the company. The equity market
allows these shares to be traded between investors and traded at a market-determined price.

FUNCTIONS OF THE EQUITY MARKET

1. Raising Capital: The key function of the equity market is raising capital for companies to
finance their business activities. When companies issue shares, they can raise funds from a large
number of investors who are willing to buy into the company's vision.

2. Facilitating Investment: The equity market provides investors with a platform to invest and
trade shares in publicly traded companies.

3. Pricing Mechanism: The equity market is an essential pricing mechanism that determines the
market value of an individual stock and the overall performance of the stock market.

4. Risk-Sharing: When investors purchase shares, they share the risks and rewards of the
company. Shareholders may receive dividends or face losses if the company performs well or
poorly.

5. Corporate Governance: The equity market plays a crucial role in corporate governance, as
companies are accountable to their shareholders and financial regulators. This accountability
helps companies to take actions that benefit their investors and the company as a whole.

ROLE OF THE EQUITY MARKET IN ECONOMIC GROWTH

The equity market plays a vital role in stimulating economic growth by providing companies
with access to capital. In turn, this allows businesses to expand their operations, increase
employment opportunities, and generate more income for the economy. A healthy equity market
also provides investors with a return on investment, encouraging them to invest further, which
results in more capital flowing into the economy.

Moreover, the equity market benefits the economy by encouraging innovation and
entrepreneurship. Entrepreneurs can use the equity market to fund new businesses and
innovations, leading to new products, services, and industries.

INVESTING IN THE EQUITY MARKET

Investing in the equity market offers investors the opportunity to earn higher returns by buying
stocks of well-performing companies. However, investors should be aware of the risks involved,
as stock prices can be volatile and subject to market changes. To invest wisely in the equity
market, investors should conduct thorough research, analyze market trends and diversify their
portfolio.

RESOLUTION:

The equity market is an essential part of an economy, providing companies with financing,
investors with investment opportunities, and stimulating economic growth. A well-functioning
equity market provides a platform for companies to raise capital, investors to share in the risk
and rewards of companies, and for entrepreneurs to fund innovative businesses. Investing in the
equity market offers investors an opportunity to generate higher returns but requires diligence
and risk management.
 BOND MARKET

INTRODUCTION:

The bond market, also known as the fixed-income market, is a crucial component of an
economy's financial system. It provides a platform for governments and corporations to raise
long-term financing through bond issuance. Bonds are financial instruments that represent a loan
that investors provide to the issuer. The bond market is a complex and diverse market, and it
plays a pivotal role in economic growth and stability. This presentation aims to provide a
comprehensive overview of the bond market, its functions, and its role in the economy.

WHAT IS THE BOND MARKET?

The bond market is a type of financial market where participants buy and sell bonds. Bonds are
debt securities that represent a loan that an investor provides to an issuer, whether a government
or a corporation. The issuer agrees to make regular interest payments to the investor for the
duration of the bond's life. At the end of the bond's life, the issuer pays the investor the face
value of the bond.

FUNCTIONS OF THE BOND MARKET

1. Raising Capital: The bond market provides issuers with a platform to raise long-term
financing by issuing bonds.

2. Liquidity: The bond market provides investors with a relatively liquid asset that can be bought
and sold on the market.

3. Risk Management: The bond market allows investors to manage their portfolio risk by
investing in a range of fixed-income securities.

4. Price Discovery: Like any financial market, the bond market provides a price discovery
system, where the price of a bond reflects the market's perception of the issuer's creditworthiness
and the risk associated with holding the bond.

5. Bond Indices: Bond market indices are used to benchmark performance, and the market offers
a range of indices that provide diverse risk profiles.

ROLE OF THE BOND MARKET IN ECONOMIC GROWTH

The bond market plays a crucial role in stimulating economic growth by providing issuers with
access to long-term financing to fund business activities. Governments can use bond proceeds to
finance public projects, such as infrastructure projects or social welfare programs. Corporations
can use bond proceeds to fund capital expenditures or acquisitions.
The bond markets helps promote low-interest rates that enable companies and governments to
borrow money cheaply and incentivizes them to invest in capital projects that create jobs and
stimulate growth.

INVESTING IN THE BOND MARKET

Bond market investments are popular for their relative safety compared to other asset classes,
such as stocks or commodities. Investors can choose from diverse types of bonds, including
government bonds, municipal bonds, corporate bonds, mortgage-backed securities, and high-
yield bonds.

Investors are compensated for holding bonds with regular interest payments and the return of the
bond's face value at maturity. Bond prices can fluctuate, but investments in high-quality bonds
are less risky than investing in stocks or other markets.

SUMMERY AND CONCLUSION

The bond market plays a critical role in promoting economic growth and stability by providing
issuers with long-term financing and investors with a relatively safe asset class. The bond market
allows portfolio risk management, price discovery, and bond indices, essential components of
any well-functioning financial system. Investing in the bond market provides investors with
opportunities for steady income streams and capital preservation.
 HEDGE FUND AND PRIVATE EQUITY

INTRODUCTION:

Hedge funds and private equity are two forms of alternative investments, distinct from traditional
investments such as stocks and bonds. They offer high-risk, high-reward investment
opportunities and are often used by institutional investors and high net-worth individuals. In this
presentation, we will explore the differences between hedge funds and private equity funds, their
roles in the economy, and their potential risks and returns.

HEDGE FUNDS

A hedge fund is a type of private investment fund that engages in a range of investment
strategies to generate high returns for investors. Hedge funds are typically closed to the general
public and require investors to meet certain criteria to participate. These criteria can include a
high net worth or experience in the investment industry.

FUNCTIONS OF HEDGE FUNDS

1. Diversification: Hedge funds offer investors a diverse range of investment strategies, from
equities to bonds and derivatives, allowing them to spread risk across a range of asset classes.

2. Risk Management: Hedge funds employ sophisticated risk management strategies to manage
risk, and many hedge funds invest in short-term market fluctuations.

3. High returns: Hedge funds target high returns for their investors by actively managing their
portfolio of investments.

ROLE OF HEDGE FUNDS IN THE ECONOMY

Hedge funds play a crucial role in the economy by providing investors with access to high-
growth, high-return investment opportunities that are not widely available through traditional
investments. Hedge funds also provide liquidity to the market by actively buying and selling
securities, which facilitates price discovery.

INVESTING IN HEDGE FUNDS

Hedge funds are typically only open to institutional investors and accredited investors, and
require a substantial investment and meeting certain criteria. Investors must be aware of the risks
associated with hedge fund investments, such as the potential for high levels of volatility and
limited liquidity.

PRIVATE EQUITY

Private equity is a type of alternative investment that focuses on investing in private companies
or taking public companies private. Private equity firms typically invest in companies that
require significant restructuring or turnaround, with the goal of selling the company at a higher
value down the line.

FUNCTIONS OF PRIVATE EQUITY

1. Capital Investment: Private equity firms provide capital to companies, which can be used to
fund growth, acquisitions, or restructuring.

2. Operational Improvements: Private equity firms provide expertise and resources to help
companies improve their operations in order to increase their value.

3. Exit Strategy: Private equity firms typically invest with a time horizon of 5-10 years and look
for exit opportunities, such as an acquisition or an initial public offering (IPO), to generate a
return for their investors.

ROLE OF PRIVATE EQUITY IN THE ECONOMY

Private equity firms play an essential role in the economy by providing access to capital for
businesses and facilitating the restructuring of struggling companies. Private equity firms can
also improve the long-term performance of companies by providing operational expertise and
resources, which can lead to increased job opportunities and economic growth.

INVESTING IN PRIVATE EQUITY

Investing in private equity typically requires a substantial investment and a long holding period.
Private equity investments are illiquid but can provide significant returns to investors. Investors
considering investing in private equity must perform thorough due diligence and carefully assess
risks before committing capital.

CONCLUSION AND SUMMERY

Hedge funds and private equity are two types of alternative investments that offer high-risk,
high-reward investment opportunities. Hedge funds provide investors with diverse investment
strategies and high returns, while private equity firms invest in private companies or take public
companies private, providing capital and operational expertise to improve performance and
facilitate a profitable exit. Investors interested in participating in these alternative investments
must carefully evaluate the risks and potential returns associated with them and seek professional
guidance before making a decision.