Financial Markets

Question 1

Why are most financial markets electronic?

Answer 1

To increase price efficiency, ease and make equal access, and the possibilities of volume

Question 2

The most important ways to classify markets are

Answer 2

According to the type of instruments traded (capital or monetary) and to the trading phase (primary or secondary)

Question 3

What are the transaction costs?

Answer 3

Explicit (added to the effective volume of the operation, they are related to the commission, taxes…) and implicit (cost supported by the investor due to ineffective execution)

Question 4

Th higher the depth =

Answer 4

the higher the effective volume and the higher the liquidity

Question 5

Bid-ask spread

Answer 5

The difference between the buy and sell price, the higher the spread the lower the liquidity

Question 6

Other criteria to classify markets

Answer 6

Electronic (not electronic) or continuous (non continous)

Question 7

What are the different types of continuous markets?

Answer 7

They can be price-driven markets (with market makers), orders-driven markets (sotck markets), and hybrid.