Marketplace Flashcards
What is a designated market maker?
They provide the most up-to-date prices on investments in the marketplace and take investment orders from brokers.
What is a broker?
represent clients and make trades for them. the clients could be banks, hedge funds, or individual investors - basically anyone who has the funds and a need for a broker.
Impact of trade deals
Events that promote economic growth, such as lifted trade restrictions, tend to benefit companies across all industries. This is because companies now have more opportunities to sell their goods and services to more consumers.
Impact of war
War tends to negatively affect the overall stock market. Big industries like consumer goods and tourism do not do as well because consumers are nervous and not spending as much. Other industries that supply things needed during war, such as aerospace and defense, tend to do well since there is more demand for aircraft and weapons.
Impact of severe weather
Severe weather tends to affect industries differently. The energy and retail industries do well because consumers are spending more on heat, electricity, and goods necessary for survival. The agriculture industry suffers because farmers are not able to harvest their crops. The airlines industry also tends to suffer because they must cancel flights during severe weather conditions.
Impact of new technology
Industries that rely on electricity to power their businesses—like the agricultural, manufacturing, and retail industries—can greatly benefit from solar power. The electrical power industry, which relies on businesses using oil and electricity, would not benefit from solar power since there would be less demand for their services.
What is the financial market?
The financial market is where people trade different types of investments. Just like you can buy and sell goods and services, you can also buy and sell different types of investments.
The Impact of the Financial Market on the government.
The government uses the financial market to help fund schools, build hospitals, and construct new roads.
The impact of the financial market on companies.
Companies access the financial market so that they can grow and build better products and services to serve their customers.
The impact of the financial market on you (The people).
Individuals, like you, can invest in the financial market and use the money you earn from those investments to help achieve their financial goals like paying for college, buying a house, or saving for retirement.
The capital market
The capital market is made up of two submarkets: the stock market and the bond market.
The stock market is the market where you can trade stocks. A stock is a piece of ownership in a company. The bond market is the market where you can trade bonds. A bond is a loan where you give money to a borrower and expect to get the money back later.
The government, companies, and individuals all participate in the capital market.
Money markets
The money market is the market where you can trade short-term money market investments. Some of these short-term investments include marketable securities, money market funds, and short-term government bonds.
Investors usually buy money market investments when they are looking for a low-risk place to store their money since these investments are typically less risky than stocks and bonds.
Derivatives Market
The derivatives market is the market where you can trade derivative products. A derivative is a contract that is priced based on the value of the good or investment being sold. If you’ve ever heard the terms like futures, forwards, and options, then you’re likely hearing about derivative products.
If derivatives sound confusing, it’s because they are. For the most part, only professional investors participate in the derivatives market since it is highly complex.
Foreign Exchange and Inter- bank Market
The foreign exchange interbank market is the market for trading currencies. Currency is the type of money a country uses. People in this market trade currencies because they can make a profit from the differences in the exchange rate between the two currencies.
Banks, financial institutions, and corporations are the main participants in the foreign exchange inter-bank market. However, technological improvements have let average investors participate in this market.
