FIN 3320 Financial Markets

Bobby Merriman Finance 3320 Financial Markets

financial system

the collection of financial markets and institutions that interact to facilitate the exchange and regulation of financial assets

real economy

the place where buyers and sellers participate in the trade of goods and services; in practice, the sum of all economic activities related to the production and distribution of goods and services within a society

financial market

a place where buyers and sellers participate in the trade of financial assets; in practice, the sum total of the foreign exchange market, the debt market, the equity market, and the derivative market

financial asset

a contract that derives its value from a claim to cash produced by a different asset (usually a real asset)

asset class

a group of assets with similar characteristics

currency

a medium of exchange used to purchase goods and services

debt instrument

an investment which represents borrowed money that needs to be repaid

equity instrument

an investment which represents ownership in a company

derivative instrument

an investment whose value is determined by and based upon the value of another asset (the value is derived from an underlying asset)

financial instrument

a contract that represents an asset to one person and a liability or equity to another person

money market instrument

an investment that matures in less than one year

foreign exchange market

the place where currency is bought and sold (also called the forex market)

debt market

the place where debt instruments are bought and sold

stock market

the place where equity instruments are bought and sold

derivative market

the place where derivative instruments are bought and sold

money market

the place where financial assets that mature in less than one year are bought and sold; usually considered a subset of the debt market

capital market

the place where financial assets that mature in more than one year are bought and sold (this is where companies raise capital, hence the name)

bond market

the place where bonds are bought and sold; usually considered a subset of the debt market

fiat currency

a type of money issued by the government

cryptocurrency

a decentralized, virtual currency

treasury bond

debt issued by the U.S. government that matures between 10 and 30 years

corporate bond

debt issued by companies to fund their long-term operations (capital budget)

common stock

ownership in a company that entitles the shareholder to a portion of the company's profits

preferred stock

ownership in a company with no voting rights but a fixed dividend

treasury bills

debt issued by U.S. government that matures in less than 1 year

commercial paper

debt issued by companies to fund their short term operations (working capital) that matures in less than 270 days