File Name: financial markets and instruments .zip
In response to reader demand, this is the first of three installments introducing fundamental concepts to those convergence market participants who are less familiar with financial derivatives markets, instruments, and conventions. Each installment will include suggested reading. Future installments will discuss weather, energy, and insurance and reinsurance concepts for the benefit of capital markets practitioners. Report bugs here. Please share your general feedback. You can join in the discussion by joining the community or logging in here.
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Money market instruments are generally financial claims that have low default risk, maturities under one year and high marketability. The Capital market is a.
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A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds , raw materials and precious metals , which are known in the financial markets as commodities. The term "market" is sometimes used for what are more strictly exchanges , organizations that facilitate the trade in financial securities, e. Much trading of stocks takes place on an exchange; still, corporate actions merger, spinoff are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange.
Capital Market Instruments pp Cite as. This book is concerned with the valuation and analysis of capital market securities, and associated derivative instruments, which are not securities as such but are often labelled thus. The range of instruments is large and diverse, and it would be possible to stock a library full of books on various aspects of this subject. Space dictates that the discussion be restricted to basic, fundamental concepts as applied in practice across commercial and investment banks and financial institutions around the world.
Here we examine the securities (instruments) traded in financial markets. We first focus on the instruments traded in the money market and then turn to those.
The assets are a close substitute for money and support money exchange carried out in the primary and secondary market. In other words, the money market is a mechanism which facilitate the lending and borrowing of instruments which are generally for a duration of less than a year. High liquidity and short maturity are typical features which are traded in the money market. The non-banking finance corporations NBFCs , commercial banks, and acceptance houses are the components which make up the money market. Money market is a part of a larger financial market which consists of numerous smaller sub-markets like bill market, acceptance market, call money market, etc. As the name suggests, money market instrument is an investment mechanism that allows banks, businesses, and the government to meet large, but short-term capital needs at a low cost. They serve the dual purpose of allowing borrowers meet their short-term requirements and providing easy liquidity to lenders.
The capital market, as it is known, is that segment of the financial market that deals with the effective channeling of medium to long-term funds from the surplus to the deficit unit. The process of transfer of funds is done through instruments, which are documents or certificates , showing evidence of investments. The instruments traded media of exchange in the capital market are:. Debt Instruments.
Search form Search. Facebook Twitter Instagram Youtube. Following an introduction to the International Monetary System and Foreign Exchange Markets, students explore spot and spot-forward arbitrage. They also engage in a FX trading competition using a Demo platform. Students will complete a project on exchange rate forecasting, and discover the essentials of financial derivatives options, futures and swaps , including practical applications.
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