financial markets Flashcards
1
Q
market definition
A
where buyers and sellers come together solely for the purpose of trade and exchange
2
Q
what is a money market
A
- provides short term lending/borrowing
- assets mature in less than a year although it could be as little as one day
- promotes liquidity
- includes treasury bills and commercial bills
3
Q
what is a capital market
A
- trading in sectors such as shares and bond’s
- medium to long term ( 1+ years)
- can fund long term business growth
4
Q
what are foreign exchange markets
A
- also called forex
- trade in foreign currency
- biggest financial market
- FX trades exceed $6tn per day
5
Q
what are primary markets
A
for new issues or newly issued government bonds.
resold in secondary markets
6
Q
what are secondary markets
A
resell 2nd hand government bonds
7
Q
what are spot markets
A
where bonds are exchanged for immediate delivery, such as commodities, currencies, and securities
8
Q
what are forward markets
A
- at some specified time in the future
9
Q
what are bills
A
-short dated loans raised either by the government or firms
- no interest, sold at discount and redeemed at parity ( sold for less than face value)
10
Q
what are bonds
A
- can either be corporate or government bonds
- form of long term borrowing and come with a guarantee amount of annual interest called a coupon
- this is often paid in two instalments of 6 months apart
11
Q
yield% equation
A
annual coupon / current market price x 100
