Having an understanding of the financial markets is a key part of the learn trading and investing course.
There are many companies and organisations in the financial markets and the major banks such as JP Morgan, Goldman Sachs and HSBC are leading players.
These banks exist for only one purpose and that is to make money/profit from the financial markets. They do this by trying to match people who need access to money and those who have money and are willing to lend or invest it. Once they have found the match they will take a percentage of the money involved.
Division of the Financial Markets
The financial markets can be considered to be in two sections – the money markets and the capital markets. The money markets are for governments and large organisations who require large amounts of money on short term borrowing terms.
The capital markets can be split into two further categories the equity market and the debt market.
The equity market tries to match potential investors with companies that are looking to raise capital and are seeking new investors. The debt market or bond market tries to match long term borrowers with long term lenders.
Below is a short video on the financial markets.
In the next lesson we shall look at stock exchanges and indices.