Financial markets and institutions
Learning Outcome 4
Six different types of financial markets
Stock market
A stock market is where shares in corporations are issued and traded.
Stock markets are key components of a free market economy.
Fixed income market
A fixed income market is a market where bonds are issued and traded.
Money market
The money market is a place for large institutions and government to
manage their short-term cash needs.
Commodities
Most individual commodities are traded in the form of futures, where what
is being traded is not the commodity itself but rather a contract to buy or
sell it for a certain price by a stated date in the future. This carries the
potential for wild market fluctuations, but it also offers exciting
opportunities for investors willing to ride out market volatility in
anticipation of rewards.
Derivatives
The derivative itself is merely a contract between two or more parties. Its
value is determined by fluctuations in the underlying asset. The most
common underlying assets include stocks, bonds, commodities,
currencies, interest rates and market indexes.
Foreign exchange market
The markets, in which participants are able to buy, sell, exchange and
speculate on currencies. Foreign exchange markets are made up of banks,
Learning Outcome 4
Six different types of financial markets
Stock market
A stock market is where shares in corporations are issued and traded.
Stock markets are key components of a free market economy.
Fixed income market
A fixed income market is a market where bonds are issued and traded.
Money market
The money market is a place for large institutions and government to
manage their short-term cash needs.
Commodities
Most individual commodities are traded in the form of futures, where what
is being traded is not the commodity itself but rather a contract to buy or
sell it for a certain price by a stated date in the future. This carries the
potential for wild market fluctuations, but it also offers exciting
opportunities for investors willing to ride out market volatility in
anticipation of rewards.
Derivatives
The derivative itself is merely a contract between two or more parties. Its
value is determined by fluctuations in the underlying asset. The most
common underlying assets include stocks, bonds, commodities,
currencies, interest rates and market indexes.
Foreign exchange market
The markets, in which participants are able to buy, sell, exchange and
speculate on currencies. Foreign exchange markets are made up of banks,
