Capital Market Essay Example | Topics and Well Written Essays - 1500 words

Capital Market - Essay Example Govt. Raises funds for different tenors. These include both long term, as well as, short term papers. The terms, used for short term and long term papers, are different depends upon the definition of the maturity of the paper. On the basis of international standards, the short term paper ranges from 3month, 6months and 12 months maturities. On the other hand, long term paper is referred to as those securities which are issued for a time period more than one year. The short term papers, which are issued by the government, are called Treasury Securities. Similarly, the long term papers by the government are called Treasury Bonds. In the middle of government issued and Private Securities, there are some other securities, which are partially backed by Govt. and private owners. Such kinds of securities are referred to as the Semi Govt. securities. Australian economy is considered as one of the most developed economies of the world. The financial markets are strong. The current inflation rate is around 1.2 %, which is relatively very low as compared to developing markets. The Reserve Bank of Australia is mainly responsible for issuing and purchasing Govt. based long term paper. The Reserve Bank of Australia is the central bank of Australia. The government of Australia raises funds by issuing the Securities named as treasury bonds. The main features of Treasury bonds are as follows Step 1: The reserve bank of Australia offers the primary dealer, which are normally the big banks of the country, to buy the treasury bonds through auctions (Armantier, 2006). The schedule of the auctions is normally published on Reuters and Bloomberg. Pass Through: It refers to the demands of corporate clients in which they can enter into auction via primary dealers based with pre-defined rates. It means if the cut off rate lies in the predefined rate then the bid will be exercise otherwise it will be wasted. Non-Competitive Biddings: The Corporate Clients and