Financial Markets
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Financial Markets depending on (4)

1. Nature of instrument:
  • Debt markets: different maturities (short-term, intermediate-term, long-term)
  • Equity markets: stock markets
 
2. Stage of issuance of instrument:
  • Primary markets: securities that are issued for the first time (=IPO)
  • Secondary markets: securities already issued -> make financial instruments liquid 
 
3. The Location:
  • Exchanges: organized markets, central location (New York Stock Exchange Market)
  • Over-the-top counter (OTC): decentralized locations 
 
4. The liquidity of an instrument:
  • Money Market: short-term debt instrument, very liquid 
  • Capital Market: long-term debt & equity instruments, less liquid 
 
Money market instruments - maturities up to 1 year
e.g. US Treasury Bill, commercial papers, bank reserves
 
Capital market instruments - maturities longer than 1 year
e.g. stocks, corporate bonds, mortgages, long-term government bonds 

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