Financial Markets, Instruments, and Market Makers

Financial Markets, Instruments, and Market Makers

• Chapter 3

• © 2003 South-Western/Thomson Learning

Learning Objectives

• Classifying financial markets
• Primary & secondary
• Money and capital
• Spot and futures
• Definitions & characteristics of financial market instruments
• Functions of market makers
• Connection of various sectors of financial markets

Introducing Financial Markets

• A market for financial claims (instruments) can be viewed as the process or mechanism that connects the buyers and sellers of claims.

Introducing Financial Markets

• Money market includes
• Markets where securities with original maturities of one year or less are traded
• Capital market includes
• Markets where securities with original maturities of more than one year are traded