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Ii A Intro To Financial Markets

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Ii A Intro To Financial Markets

  1. 1. Financial Markets <ul><li>“In Markets, there is no such thing as scarcity or oversupply. There is only price.” </li></ul>
  2. 2. Financial Markets <ul><li>Specialisation </li></ul><ul><li>Separation of production & </li></ul><ul><li>consumption decisions </li></ul><ul><li>Intermediation </li></ul><ul><li>Separation of savings and </li></ul><ul><li>investment decisions </li></ul>
  3. 3. Intermediation <ul><li>Maturity </li></ul><ul><li>Size </li></ul><ul><li>Liquidity </li></ul><ul><li>Risk </li></ul>
  4. 4. Functions <ul><li>Intermediation : capital raising </li></ul><ul><li>Price discovery & asset valuation </li></ul><ul><li>Investment : allocation of capital </li></ul><ul><li>Risk management </li></ul>
  5. 5. Financial Markets <ul><li>Equities </li></ul><ul><li>Fixed income securities </li></ul><ul><li>Foreign exchange </li></ul><ul><li>Derivatives </li></ul>
  6. 6. Market Participants <ul><li>Investors : Risk & return </li></ul><ul><li>Speculators : Liquidity & price info </li></ul><ul><li>Arbitrageurs : Efficiency & law of one price </li></ul>
  7. 7. Investors <ul><li>Retail </li></ul><ul><li>Institutions </li></ul><ul><li>: Mutual funds </li></ul><ul><li>: Insurance companies </li></ul><ul><li>: Pension funds </li></ul><ul><li>Institutionalisation of financial markets </li></ul>

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