International Financial Markets Flashcards
What are the characteristics of Financial Markets?
Liquidity: Ease of value recovery
Maturity: TERM OF THE SECURITY
Regulation: Control issuance and handling of financial securities
Mediation: Middlemen involvement in the issuance, sale, and purchase of securities
Classification of Financial Markets
Maturity: Money Market, Capital Market
Regulatory jurisdiction: Domestic/ internal Markets v External Markets
Mediation: Intermediated Markets v Non-intermediated markets
Difference between Capital and Money Markets
Money markets are avenues for the sale and purchase of short term securities with maturity periods under a year.
Capital Markets are avenues where long term securities are bought or sold. The maturity period often exceeds one year.
Internal v External Markets
IM: Markets that are regulated by the country where the security is issued, denominated, and where securities are issued in the currency of the host country
EM: Market containing securities placed outside of the borders of the country of origin that can be regulated by more than one country or by no country at all.
Intermediated v Non-intermediated markets
Intermediated market: Market in which the financial institution acts as a bridge between lenders and borrowers
non-intermediated market: Market in which borrowers and savers interact directly with each other.
