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CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Most business organizations are financed by debt capital and equity contribution of its shareholders.  The company raises its equity capital by new share issues and by means of retained earnings which are plough back for future dividends and earning growths.  New shares may be offered for sales to members of the public who are invited to subscribe or to existing share holders who are invited to apply for additional shares. The financial market is that market where companies or firms raises needed funds for their on-going operations as well as for long term capital expenditures. These firms, may also temporarily place its surplus in quick yielding short term investments until its final disposition.  This market is the mechanism that exist in order to facilitate the exchange of financial assets.

The market functions effectively with the activities of financial intermediaries that issues financial claims against themselves.  This means that they sell financial assets representing claims on themselves in return for cash. In disclosing the operations of the market, it is pertinent to reveal how an investor should go about making decisions on marketable securities in which to invest, how extensive the investment should be and when the investment should be made, this research work is aimed at revealing the secrets of sound investment.  Investors and members of the financial market will find this work very useful.  
1.2     STATEMENT OF THE PROBLEM
The joy that is associated with successful investment is always applauded with great financial returns.  Investors are generally confronted with the problem of returns.  There is always differences in their expected return and what turns out to be the actual return in investments held by them. Hence, within the confines of the Nigerian financial market, the following difficulties arises. How are securities bought and sold? How do investors take decisions about marketable securities in which to invest? How should seasoned Investors go about minimizing the problems of risk held in their investment? All these issues are to be addressed in the plight of this work.  
1.3     OBJECTIVES OF THE STUDY
Like any market, the financial market is where buyers and sellers meet in order to exchanges things for money and money for other things, since this market has no physical location or place but rather comprises of thousands or even millions of participants and offices linked by a vast network of telecommunications which brings its buyer and seller together. This research work has the following objectives in mind to expose the activities of jobbers and Brokers in the operations of the market. To be able to show how a successful investor can evaluate his risk, thereby constituting a better portfolio for efficient returns. Also to be able to acquaint investors with the pricing system, especially that of the capital market.    
1.4     SIGNIFICANCE OF THE STUDY  
This research work is to provide the general public with the merit of investing their surplus funds rather than tying it down.  It will serve as a guide to enlighten them on the operational system of the Nigeria financial market. This project work is intended to serve as an aid to the general public, investors, students of financial management in our various institutions of higher learning and shall also be of great importance to financial analyst in carrying out their various dealings in the financial market.  
1.5     SCOPE OF THE STUDY
The coverage of this work includes, to acquaint investors with the advantages of undertakings in the financial market. This research work also cover the various organizations that constitute the Nigeria financial market.  It also included, how we can deal with the risk we hold in our investment. However, this work centres around the operations in the money market and the capital market.  
1.6     RESEARCH METHODOLOGY
Some financial organizations are sampled are the information needed are collected through the following sources.  
INTERVIEWS Oral but structural interviews were held with some firms, companies, and financial managers.  
QUESTIONNAIRES Questionnaires were made and sent to some financial organizations.  This provide a large part of the primary data of the research. Books:  Some journals and related magazines were researched into and relevant information was extracted for the benefit of this work. The types of report or data sorted were completely in pursuit for the attainment of this goal.      
1.7     LIMITATIONS OF THE STUDY
This research work is limited to the effective investment process by investors in the financial market. The reports used are restricted to some of the financial institutions within the locality of Enugu State and Benue State. Efforts made by me in carrying out this task was very successful but then a lot of factors militates against my expansion of this topic, among which are finance.  The money required in my transportation fare were only capable in carrying me through some corporate institution within Benue State, otherwise, I would have visited the exchange head office. Also the inability of some financial managers in some of the firms I sent in my questionnaires to return them also gave me some uncomfortable break in my effort. Despite all the odds I strived so hard to come out with several but useful information for this work.      
1.8     DEFINITION OF TERMS
For the purpose of this work the terms used in the presentations of this report shall be define as follows:
i)       Investors:  Person(s) either natural or artificial who undertakes investment
ii)      Bonds:  This is a long term promising note issue by a business organization or government when they need to borrow money
iii)     New Issues:  This is bonds first issue
iv)     Outstanding Bond:  This refer to a bond that has been floating for a while in the market
v)      Par Values:  The stated face value of the usual set it represent the amount of money the firm borrows or promise to pay at some future time.
vi)     Profitability:  Analysis:  This is the ratio of deciding whether the company will make a profit or loss.
vii)    Coverage Ratio:  The ratio used to determine how much revenue is able to cover some of the interest earn.
viii)   Right Issue:  This is the method whereby a company offers more of its shares to existing shareholders by allowing them buy certain quantity of the issues in proportion to what they already hold.
ix)     Portfolio:  This is a collection of Investment Securities.

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