Chapter 1 Role of Financial Markets and Institutions: describe the types of financial markets that facilitate the flow of funds, describe the types of securities traded within financial markets, describe the role of financial institutions within financial markets,...
The Terrorism Risk Insurance Extension Act of 2005 requires the President’s
Working Group on Financial Markets (PWG) to perform an analysis regarding the long-
term availability and affordability of insurance for terrorism risk, including group life
coverage; and coverage for chemical, nuclear, biological, and radiological events; and to
submit a report of its findings to Congress by September 30, 2006.
Mathematical Finance is themathematical theory of financialmarkets.
It tries to develop theoretical models, that can be used by “practitioners”
to evaluate certain data from “real” financial markets. A model
cannot be “right” or wrong, it can only be good or bad ( for practical use
). Even “bad” models can be “good” for theoretical insight.
This chapter describe the background and corporate use of the following international financial markets: foreign exchange market, international money market, international credit market, international bond market, international stock markets.
Chapter 3 provides knowledge of financial instruments, financial markets, and financial institutions. In this chapter we will survey the financial system in three steps: Financial instruments or securities, financial markets, financial institutions.
In this chapter, you will explore international financial markets. You will also: Learn about the international bond, international equity, and eurocurrency markets; understand the primary functions of the foreign exchange market; and examine the main instruments and institutions of the foreign exchange market.
Lecture Money and banking - Lecture 06 introduce the financial instruments and financial markets. The main contents of this lecture include all of the following: Financial instruments, examples, financial markets, roles, structure, financial institutions.
Essentials of Investments: Chapter 2 - Financial Markets and Instruments presents Major Classes of Financial Assets or Securities, Markets and Instruments, Money Market Instrument Yields, Bank Discount Rate, Bond Equivalent Yield.
This introductory chapter reviewed the basic operations of domestic and foreign financial markets and institutions. It described the ways in which funds flow through an economic system from lenders to borrowers and outlined the markets and instruments that lenders and borrowers employ to complete this process.
Chapter 2 - Determination of interest rates. This chapter reviewed the determinants of nominal interest rates and their effects on security prices and values in domestic and foreign financial markets. It described the way funds flow through the financial system from lenders to borrowers and how the level of interest rates and its movements over time are determined. The chapter also introduced theories regarding the determination of the shape of the term structure of interest rates.
Chapter 8 - Stock markets. In this chapter, we examined corporate stocks and stock markets. Holders of corporate (preferred and common) stock have an ownership interest in the issuing firm based on the percentage of stock held. Stock markets are the most watched and reported of the financial markets. We described the major characteristics of corporate stocks for example, dividend rights, residual claim status, limited liability, and voting rights of stockholders.
Chapter 9 - Foreign exchange markets. In this chapter, we reviewed foreign exchange markets. Foreign exchange markets have grown to be among the largest of the world's financial markets. We reviewed the trading process in this market, paying particular attention to the role played by financial institutions in the operations of the foreign exchange market.
Chapter 16 - Securities firms and investment banks. This chapter presented an overview of security firms, which primarily offer retail services to investors, and investment banking firms, which primarily offer activities and services related to corporate customers. Firms in this industry help bring new issues of debt and equity to the financial markets.
Part II of this book focuses on financial markets, markets in which funds are trans-
ferred from people who have an excess of available funds to people who have a short-
age. Financial markets such as bond and stock markets are crucial to promoting
greater economic efficiency by channeling funds from people who do not have a pro-
ductive use for them to those who do. Indeed, well-functioning financial markets are
a key factor in producing high economic growth, and poorly performing financial
markets are one reason that many countries in the world remain desperately poor.
Measuring the institutional foundations of financial markets is essential for understanding
its determinants, and help design better policies
• Indices of the rule of law, creditor rights and information, business transparency, and the
quality of infrastructure are associated with deeper and more efficient financial markets
• In banking and securities markets, characteristics related to private monitoring and enforcement
drive development more than public enforcement measures
With the wide swings in the stock prices in recent years, students of money and banking have become increasingly interested in what drives the stock market. As a result, I have expanded the discussion of this market by describing simple valuation methods for stocks and examining recent developments in the stock market and the link between monetary policy and stock prices.
Financial globalization could be described as a process in which global financial activities get increasingly integrated with the risk creation mechanism. This description emphasizes three points. First, financial globalization is not only a process in which financial activities transcend national borders, but also a process in which risks spread across the markets. Second, financial globalization is initiated by many micro-economic entities to seek profits and is driven by the integration of global financial markets. Third, it is a gradually deepening process with distinct phases....
In a “perfect world” environment with no taxes, no transaction costs and perfectly efficient financial markets, capital structure does not matter.
This is known as the Independence hypothesis: firm value is independent of capital structure.
A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costsand at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods.