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Ch001

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  • 1. FINANCIAL MARKETS Money Markets Capital Markets
  • 2. <ul><li>Definition of Financial Markets: </li></ul><ul><li>A mechanism that allows people to trade in financial securities, commodities and other items of value. </li></ul><ul><li>They facilitate: </li></ul><ul><li> The raising of capital </li></ul><ul><li>The transfer of risk </li></ul><ul><li>International trade </li></ul>
  • 3. <ul><li>The components of Financial Markets are: </li></ul><ul><ul><ul><li>Money Markets </li></ul></ul></ul><ul><ul><ul><li>Financial Markets </li></ul></ul></ul>
  • 4. Definition of Money Markets <ul><li>Component of financial markets for short term assets: maturities of less than one year. </li></ul><ul><li>Characteristics of Money Markets </li></ul><ul><li>They are generally very safe investments but </li></ul><ul><li>with relatively very low returns. </li></ul>
  • 5. <ul><li>Time Deposits – Certificates of Deposit </li></ul><ul><li>Repurchase Agreements </li></ul><ul><li>Short Term Loans </li></ul><ul><li>Commercial Papers </li></ul><ul><li>Federal Agency Short Term Securities </li></ul><ul><li>Federal Funds </li></ul><ul><li>Municipal Notes </li></ul><ul><li>Treasury Bills </li></ul><ul><li>Money Funds </li></ul><ul><li>Foreign Exchange Swaps </li></ul>Money Markets Instruments
  • 6. Definition of Capital Markets <ul><li>It is a market for securities where business and government can raise long –term funds. </li></ul><ul><li>It is a market where money is provided for periods longer than one year . </li></ul>
  • 7. Charachteristics of Capital Markets: <ul><li> They are considered to have a component of higher risk than Money market. </li></ul><ul><li>As such they are expected to have a higher return. </li></ul>
  • 8. c <ul><li> Bond Market </li></ul><ul><li>Fixed Income </li></ul><ul><li>Corporate Bond </li></ul><ul><li>Government Bond </li></ul><ul><li>Municipal Bond </li></ul><ul><li>High Yield Debt </li></ul>Capital Markets Instruments
  • 9. <ul><li>Stock Market </li></ul><ul><li>Stock </li></ul><ul><li>Preferred Stock </li></ul><ul><li>Common Stock </li></ul><ul><li>Registered Share </li></ul><ul><li>Voting Share </li></ul><ul><li>Stock Exchange </li></ul>Capital Markets Instruments

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