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Classification of Financial Markets

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ana marie lat

on 23 July 2014

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Transcript of Classification of Financial Markets

Classification of Financial Markets
Primary Markets
A financial market in which newly issued primary and secondary securities are traded for the first time.
Secondary Market
A secondary market is that financial market through which existing financial securities are traded.
Money Market
a Financial market on which debt securities with an original maturity of one year or less are traded.
Capital Market
portion of the financial market where trading is undertaken for securities with maturity of more than one year.

Capital market is subdivided into 3 parts
Bond market
Stock market; and
mortgage market
Bond Market
The market for debt instruments of any kind. It operates through a system of dealers using a telecommunications network, rather than in a single physical location for trading.
Stock market
Financial market where the common and preferred stocks issued by corporations are traded.
Stock market 2 components
organized exchange
less formal over-the-counter markets
There are many organized
exchanged throughout the world like the New York and London Stock Exchanges. In the Philippines, stocks are openly traded in the Philippine Stock Exchange. The companies whose stocks are traded in the Philippine Stock Exchange are classified into the following:
Financial Services
power and energy
transportation services
construction and other services
food, beverages, and tobacco
holding firms
manufacturing, distribution, and trading
hotel, recreation, and other services
bonds, preferred stocks, and warrants
Mortgage Market
Portion of the financial market which deals with loans,on residential, commercial, and industrial, real estate, and farmland.
Consumer Credit Market
the market involve in loans on autos, appliances, travels, and education.
Auction Market
Auction market is one where trading is conducted by an independent third party according to a matching of prices on orders received to buy and sell particular security.
Negotiation Market
When Buyers and sellers of securities negotiate with each other regarding price and volume, either directly or through a broker or dealer.
Organized Market
financial market with fixed trading rules. Another name for organized markets are EXCHANGES like the Philippines Stock Exchange.
Over-the-Counter Market
market consisting of large collection of brokers and dealers, connected electronically by telephones and computers that provide for trading in unlisted securities.
All Securities not traded in the in the stock exchange, for one reason or another, are traded over the counter.
Over The Counter Market consist of facilities, namely:
relatively few dealers who hold inventories or over-the-counter securities and act as a securities market;
the many broker who act as agents in bringing these dealers together with investors; and
the computers, terminals, and electronic networks that provide a communications link between dealers and brokers.
Spot Market
When securities are traded for immediate delivery and payment.

*The spot market is an alternative to the future market.
Futures Market
markets where contracts are originated
and traded that give the holder the right to buy something in the future at a price specified by a contract.
Options Market
is where

stock options
stock options
- is a contract giving the owner the right to either buy or sell fixed number of shares of stock at any time before the expiration date at a price specified in the option.
The Flow of Funds and Securities in Primary and Secondary Markets
Investment Bankers and Private Placement
Business sector
Stock exchange and
Common stock and
bond certificates
Common stock and
bond certificates
New common stock
and bond certificate
New stocks
and Bond Certificate
New Funds
SECONDARY MARKETS: Seasoned or Existing Issues
Romans 8:18 For I reckon that the sufferings of this present time are not worthy to be compared with the glory which shall be revealed in us.
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