Functions And Roles Of Regulatory Agencies SS3 Economics Lesson Note

PECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

1. State the objectives of regulating capital markets.
2. List the tools/instruments used in capital markets.
3. State the significance of the agencies in the economy

INSTRUCTIONAL TECHNIQUES: 

• Identification, 
• explanation, 
• questions and answers, 
• demonstration, 
• videos from source

INSTRUCTIONAL MATERIALS: 

• Videos, 
• loudspeaker, 
• textbook, 
• pictures

NOTE

CAPITAL MARKET

Funds are needed by entrepreneurs, government, and business firms on a long-term basis. The money market cannot provide these needed funds. Hence Capital Market bridges this gap. Capital Market is a market where long-term securities are traded.

INSTRUMENTS USED IN CAPITAL MARKET

Securities such as shares, stocks, development stock, bonds, debenture
A. Share- is a unit of capital measured by a sum of money which is an individual portion of the company’s capital owned by a shareholder. It is a means of raising long-term loans for companies through the Stock Exchange Market.
B. Stock- is the bundle of shares or mass capital that can be transferred in fractional amounts. Stocks are always fully paid, for example, stocks can be quoted per N100 nominal value. They are collections of shares into a bundle. Stocks are not issued but converted from shares issued.
C. Development Stock- is a debt instrument through which governments get long-term loans or borrowing for a period of up to five years and above.
D. Bond- is an interest-bearing or discounted government or corporate security that obliges the issuers to pay the bondholder a specified sum of money annually at specific intervals and to repay the principal amount of the loan at maturity.
E. Debenture- an instrument or a loan certificate for raising a long-term loan from the public by a limited company. A debenture is a debt and a debenture holder is not a co-owner of the business but a creditor.

INSTITUTIONS INVOLVED IN CAPITAL MARKET

• i. Issuing houses
• ii. Insurance companies
  iii. Development Banks
  iv. Building Societies
  v. National Provident Fund (NPF)
  vi. Stock Exchange 

FUNCTIONS OF CAPITAL MARKET

1. Capital market provides a long-term loan for investment.
2. The capital market serves as a forum through which the public sector takes part in running the economy.
3. The capital market helps to mobilize savings for investment purposes.
4. It provides means through which merchant banks can grow and develop.
5. It allows the general public to participate in the running of the economy of the country.

 EVALUATION

1. Define capital market
2. Discuss three agencies that regulate the capital markets
3. State and explain three instruments used in the capital market
4. State four functions of the capital market

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively