Financial Markets

and Institutions
Rolando H. Tuazon Jr.
Role of
Financial Markets

Financial markets create securities products that provide a

return for those who have excess funds (Investors/lenders) and
make these funds available to those who need additional money
(borrowers). 

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1 Financial Markets
is a market in which people trade financial securities
and derivatives at low transaction costs. Some of the
securities include stocks and bonds, and precious
metals.
Financial
Markets

╸ A stock (also known as equity) is a security that represents the

ownership of a fraction of a corporation. This entitles the owner
of the stock to a proportion of the corporation's assets and
profits equal to how much stock they own.

╸ Units of stock are called "shares."

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Financial
Markets
╸ A bond is a fixed income instrument that represents a loan made
by an investor to a borrower (typically corporate or
governmental). A bond could be thought of as an I.O.U. between
the lender and borrower that includes the details of the loan and
its payments.

╸ An IOU (abbreviated from the phrase "I owe you") is usually an

informal document acknowledging debt.

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Financial
Markets
╸ Precious metals is a term for the classification of metals that are
considered to be rare and/or have a high economic value. The
higher relative values of these metals are driven by various
factors including their rarity, uses in industrial processes and as
investment vehicles.

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Types of
Financial Markets

Physical asset markets

vs . Financial asset markets

Spot markets
vs. Futures markets

Money markets
vs . Capital markets

Primary markets
v s . Secondary markets

Public markets
vs. Private markets

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2 Financial Institutions
is
otherwise
a company
known
engaged
as banking
in the business
institutions,
of dealing
are with
financial
corporations
and that
monetary
providetransactions
services assuch
intermediaries
as deposits,
loans,
of financial
investments,
markets.and currency exchange.
10 Major Categories of
Financial Institutions

Investment banks Life insurance companies

Commercial banks Mutual funds

Financial services
Exchange traded funds
corporations
Credit unions Hedge funds

Pension funds Private equity companies

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3 The Stock Market
Is most important
active
is the collection ofsecondary
market
markets market
andfor financialwhere
exchanges managers.
regular activities of buying, selling, and issuance of
shares of publicly-held companies take place.
2 Basic Types of
Stock Market

Physical Location Stock Over-The-Counter (OTC) &The

1 2
Exchanges NASDAQ Stock Markets

Formal organizations having A large collection of brokers and

tangible physical locations that dealers, connected electronically
conduct auction markets in by telephones and computers, that
designated (“listed’) securities. provides for trading in unlisted
securities.

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 END OF
PRESENTATION

THANK YOU
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