The main contents of this lecture include all of the following: Overview of financial markets, types of financial markets, securities traded in financial markets, valuation of securities in financial markets, market efficiency, financial market regulation, global financial markets, role of financial institutions in financial markets, comparison of roles among financial institutions, overview of financial institutions, global expansion by financial institutions. | Chapter 1 Role of Financial Markets and Institutions Financial Markets and Institutions, 7e, Jeff Madura Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved. Chapter Outline Overview of financial markets Types of financial markets Securities traded in financial markets Valuation of securities in financial markets Market efficiency Financial market regulation Global financial markets Role of financial institutions in financial markets Comparison of roles among financial institutions Overview of financial institutions Global expansion by financial institutions * Overview of Financial Markets A financial market is a market in which financial assets (securities) can be purchased or sold Financial markets facilitate financing and investing by households, firms, and government agencies Participants that provide funds are called surplus units ., households Participants that enter markets to obtain funds are deficit units ., the government A major participant in financial markets is the Fed, because it controls the money supply * Types of Financial Markets Financial markets can be distinguished by the maturity structure and trading structure of its securities Money versus capital markets The flow of short-term funds is facilitated by money markets The flow of long-term funds is facilitated by capital markets Primary versus secondary markets Primary markets facilitate the issuance of new securities ., the sale of new corporate stock or new Treasury securities Secondary markets facilitate the trading of existing securities ., the sale of existing stock Securities traded in secondary markets should be liquid * Types of Financial Markets (cont’d) Organized versus over-the-counter markets A visible marketplace for secondary market transactions is an organized exchange Some transactions occur in the over-the-counter (OTC) market (a telecommunications network) Knowledge of financial markets is power Decide which markets to | Chapter 1 Role of Financial Markets and Institutions Financial Markets and Institutions, 7e, Jeff Madura Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved. Chapter Outline Overview of financial markets Types of financial markets Securities traded in financial markets Valuation of securities in financial markets Market efficiency Financial market regulation Global financial markets Role of financial institutions in financial markets Comparison of roles among financial institutions Overview of financial institutions Global expansion by financial institutions * Overview of Financial Markets A financial market is a market in which financial assets (securities) can be purchased or sold Financial markets facilitate financing and investing by households, firms, and government agencies Participants that provide funds are called surplus units ., households Participants that enter markets to obtain funds are deficit units ., the government A major .
