1.

1 Bond
The bond market offers opportunities for companies and the government to secure money to
finance a project or investment. In a bond market, investors buy bonds from a company, and the
company returns the amount of the bonds within an agreed period, plus interest.

1.2 Derivative
It facilitates the trading in financial instruments such as futures contracts and options used to
help control financial risk. The instruments derive their value mostly from the value of an
underlying asset that can come in many forms – stocks, bonds, commodities, currencies or
mortgages. The derivatives market is split into two parts which are of completely different legal
nature and means to be traded.

1.3 Money
The money market enables economic units to manage their liquidity positions through lending
and borrowing short-term loans, generally under 1 year. It facilitates the interaction between
individuals and institutions with temporary surpluses of funds and their counterparts who are
experiencing a temporary shortage of funds.

1.4 Foreign exchange market

It’s the largest, most liquid market in the world with an average traded value of more than $5
trillion per day. It includes all of the currencies in the world and any individual, company or
country can participate in it.

1.5
2.1 Financial Market
Financial Market refers to a marketplace, where creation and trading of financial assets, such
as shares, debentures, bonds, derivatives, currencies, etc. take place. It plays a crucial role in
allocating limited resources, in the country’s economy. It acts as an intermediary between the
savers and investors by mobilizing funds between them.

3. Categories of Bonds
3.1 Treasury bonds

Treasuries are issued by the federal government to finance its budget deficits.