4-1 Structure and functions of the financial markets

Structure and functions of the financial markets

Financial markets can be broken into many distinct parts.some divisions such as domestic and international markets, or corporate and government markets, are self explanatory(明显的). others such as money and capital markets need some explanation. Money markets refer to markets dealing with short term securities that have a life of one year or less. Securities in these markets can include commercial paper sold by corporations to finance their daily operations, or certificates of deposit with maturities of less than one year sold by banks. Examples of money markets securities are presented more fully in chapter 7.

Capital markets are generally defined as markets where securities have a life of more than one year. Although capital markets are long term markets, as opposed to shourt term money markets, it is common to break down the capital markets into intermediate markets and long term markets. The capital markets include securities such as common stock, preferred stock, and corporate and government bonds. Capital markets are fully presented in chapter 14. now htat you have a basic understanding og the makeup of the financial markets, you need to understand how these markets affect corporate managers.