FINANCIAL

MARKETS
FINANCIAL MARKETS

Are institutions and systems that facilitates

transactions in all types of financial claims.
They are the bridge between those with
excess funds and those who need funds.
CLASSIFICATION OF FINANCIAL MARKETS

• As to term or maturity
• As to type of issue
AS TO TERM OR MATURITY

• Money market
• Capital market
MONEY MARKET

They cover short-term debt instruments.

These can be comprised of short-term
treasury bills issued by the government,
banker’s acceptances, negotiable
certificates of deposit, and commercial
papers.
THE PHILIPPINE MONEY MARKET

Started in 1965 primarily as a facility for

trading excess funds among commercial
banks. This trading between banks is called
interbank.

It is a requirement to have a minimum

balance for depositors to earn interest.
CAPITAL MARKET

They cover long-term debt instruments.

Both debt and equity securities are traded
in the capital markets, unlike money
markets. Higher risk, but higher reward.
CAPITAL MARKET

In a securities market, companies issue

common stocks or bonds to obtain
long-term funds.
AS TO TYPE OF ISSUE

• Primary market
• Secondary market
PRIMARY MARKETS

They are markets for new issues of financial

instruments like bonds or stocks. They work
by selling these bonds and stocks to
investors.

Most primary market transactions are done

through investment banks, also called
merchant banks.
SECONDARY MARKETS

Markets for currently outstanding securities.

Shares held by the public are termed
outstanding shares or securities. They do
not increase the funds of the company
that owns the securities.
PRICE REPORTS

Open – stock price for the first transaction

at the start of trading day

Low – lowest stock price during the day

High – highest stock price during the day

Close – stock price for the last transaction

of the day
 FINANCIAL
INSTITUTIONS/
INTERMEDIARIES
FINANCIAL INSTITUTIONS/INTERMEDIARIES

Are firms that bridge the gap between the

surplus units or investors lenders and the
deficit units or borrowers, which issue their
own financial instruments called
secondary instruments.
CLASSIFICATIONS OF FINANCIAL INSTRUMENTS

• Depository institutions
• Non-financial institutions
DEPOSITORY INSTITUTIONS

As the name implies, refers to the financial

institutions that accepts deposits from
surplus units.