Financial markets
Any place where buyers and sellers meet to trade financial assets. Financial markets has 3 types
1. Money markets
2. Capital markets
3. Currency markets
Money Markets : Financial assets which have a maturiry or a payback date of year or less. For eg: Government bonds or corportate bonds that has date of a year or less that are paid back in year or less will be traded bought and sold in money market. Interbank lending that's taking place so commercial banks are lending to another commercial bank or commercial bank is borrowing from another commercial bank those tranactions are often daily and therefore take place in the money market.
Capital Markets : Capital market is buying and selling of financial assets which has payback date of greater than a year. so not quite as liquid as money market transactions
Debt Capital: is any financial asset which pays back an interest rate is a form of borrowing for the issuer
Debt Capital is kind of Capital market where buying and selling of Government bonds which has got maturiry date of greater than a year asset
Equity Capital : If anybody has equity capital then they have a stake (or share) of the business and return is interest dividend (not interest rate) or share of the profit.
Equity Capital is kind of share.
There is 2 types of Capital markets
1. Primary - Where brand new bonds will be issued then those transactions will take place in primary capital markets
2. Secondary - Where new bonds and shares can be bought and sold again and again that will take place in a secondary markets
Currency market : It is having 2 types
1. Spot market: where you can buy currency at current exchange rate and get delivered to you right now
2. Futures market: where you can buy currency at given exchange rate but that currency delivered to you at some time in the future. Now question why would anybody want to engage in future market for eg., if you are importer and you are worried about a weak exchanger in six months time, if you are importing raw materials when the exchange rate is weaker than's a higher cost to you. so you may predict that exchange rate is going to get weaker in six months time. You might do is buy your currency now at the current exchange let it get delivered to you in six month time, when currency on exchange rate weakens and you are protected against that
1. Money markets
2. Capital markets
3. Currency markets
Money Markets : Financial assets which have a maturiry or a payback date of year or less. For eg: Government bonds or corportate bonds that has date of a year or less that are paid back in year or less will be traded bought and sold in money market. Interbank lending that's taking place so commercial banks are lending to another commercial bank or commercial bank is borrowing from another commercial bank those tranactions are often daily and therefore take place in the money market.
Capital Markets : Capital market is buying and selling of financial assets which has payback date of greater than a year. so not quite as liquid as money market transactions
Debt Capital: is any financial asset which pays back an interest rate is a form of borrowing for the issuer
Debt Capital is kind of Capital market where buying and selling of Government bonds which has got maturiry date of greater than a year asset
Equity Capital : If anybody has equity capital then they have a stake (or share) of the business and return is interest dividend (not interest rate) or share of the profit.
Equity Capital is kind of share.
There is 2 types of Capital markets
1. Primary - Where brand new bonds will be issued then those transactions will take place in primary capital markets
2. Secondary - Where new bonds and shares can be bought and sold again and again that will take place in a secondary markets
Currency market : It is having 2 types
1. Spot market: where you can buy currency at current exchange rate and get delivered to you right now
2. Futures market: where you can buy currency at given exchange rate but that currency delivered to you at some time in the future. Now question why would anybody want to engage in future market for eg., if you are importer and you are worried about a weak exchanger in six months time, if you are importing raw materials when the exchange rate is weaker than's a higher cost to you. so you may predict that exchange rate is going to get weaker in six months time. You might do is buy your currency now at the current exchange let it get delivered to you in six month time, when currency on exchange rate weakens and you are protected against that
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