FINANCIAL MARKETS AND INSTITUTIONS
FUNDAMENTALS (CHAPTER 1)
Financial Markets
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broadly refers to any market place where trading of securities
occurs.
Includes stock market, bond market, forex market, and
derivatives market.
market where buyers and sellers trade commodities, financial
securities, foreign exchange, and other freely exchangeable items
(fungible items) and derivatives of value at low transaction
costs and at prices that are determined by market forces.
FOUR CATEGORIES OF TRADE COMMODITIES

Metals (gold, silver, platinum, and copper)

Energy (crude oil, heating oil, natural gas, and gasoline)

Livestock and meat (lean hogs, pork bellies, live cattle, and
feeder cattle)

Agricultural (corn, soybeans, wheat, rice, cocoa, coffee, cotton
and sugar)
Primary Markets
-
Markets in which user of funds (governments and
corporations) raise funds by issuing financial instruments
(stocks and bonds).
-
original sale of securities
Secondary Markets
-
markets where financial instruments are traded among
investors.
Money Markets
-
markets that trade debt securities with maturities of one year or
less (e.g. treasury bills).
Capital Markets