Chapter 4 Financial MarketsEnglish in Finance4.1Financial Market and Financial SystemBasic Functions of Financial MarketMajor Players in Financial MarketComponents of Financial MarketWhat is a Financial SystemFinancial Market ComponentsFinancial market is the place where assets like equities, bonds, currencies, derivatives and stocks are traded.Some of the salient features of financial market are: (1)transparent pricing; (2) basic regulations on trading; (3) low transaction costs;(4) market-determined prices of traded securities.Financial marketSix key functions of Financial Market 124356Borrowing and LendingDetermination of PricesAssimilation and Co-ordination of Information 信息的聚集与交流LiquidityRisk SharingEfficiencyMajor Players in Financial Market124356BanksInsurance companiesFinance companiesMerchant banks 投资银行CompaniesMutual funds7GovernmentComponents of Financial Market124356Capital marketCommodity marketMoney marketDerivatives marketFutures market Insurance market7Foreign exchange marketFinancial SystemA financial system is the system that covers financial transactions and the exchange of money between investors, lender and borrowers.A financial system can be defined at the global, regional or firm-specific level. Multiple components make up the financial system of different levels: Within a firm, the financial system encompasses all aspects of finances. For example, it would include accounting measures, revenue and expense schedules, wages and balance sheet verification. Regional financial systems would include banks and other financial institutions. As for financial services in a global view, they would include the International Monetary Fund (IMF), central banks, World Bank and the major banks that practice overseas lending.Financial Market Components1Financial markets：primary markets, secondary markets. Financial instruments： cash instruments, derivative instruments.23Financial institutions： commercial banks, central banks, public banks, cooperative banks4.2Capital MarketWhat is a Capital MarketCapital Markets in ContextStock MarketsBond MarketsMortgage marketsCapital market（资本市场）What is a Capital MarketCapital markets are venues where securities with an original maturity that is greater than one year are traded.原始期限超过一年的有价证券交易场所Core function - improve the efficiency of transactions Including - primary markets, where new equity stock and bond issues are sold to investors, and secondary markets, where existing securities are traded.Capital market（资本市场）Capital Markets in Context（资本市场的具体内容）In the context of corporate finance, the term refers to venues for obtaining investable capital for nonfinancial companies. In a financial services industry context, the term, capital markets, refers to the private markets where financial companies are involved primarily in, as opposed to public ones.In the context of public markets operated by a regulated exchange, capital markets can refer to equity markets in contrast to debt, bond, fixed income, money, derivatives, and commodities markets. In a tax context, capital markets might refer to investments intended to be held for over one year for capital gains tax treatment. Stock MarketsStock markets allow investors to buy and sell shares in publicly traded companies. They are one of the most vital areas of a market economy as they provide companies with access to capital and investors with a slice of ownership in the company and the potential of gains based on the companys future performance. This market can be split into two main sections: the primary market and the secondary market. The primary market is the place where new issues are first offered, with any subsequent trading going on in the secondary market.Bond MarketsThis market is alternatively referred to as the debt, credit or fixed-income market, which is much larger in nominal terms than the worlds stock markets. The main categories of bonds are corporate bonds, municipal bonds, and U.S. Treasury bonds, notes and bills, which are collectively referred to as simply Treasuries.Mortgage markets（住房抵押贷款市场）A mortgage is a long-term loan secured by real estate. A developer may obtain a mortgage loan to finance the construction of an office building, or a family may obtain a mortgage loan to finance the purchase of a home. The mortgage markets differ from the stock and bond markets in important ways. First, the usual borrowers in the capital markets are government entities and businesses, whereas the usual borrowers in the mortgage markets are individuals.Second, mortgage loans are made for varying amounts and maturities, depending on the borrowers needs, which would cause problems for developing a stock or bond market yet.4.3Money MarketWhat is a Money MarketMarket Participants and InstrumentsMoney market featuresMoney Market FundsMoney market reposMoney market（货币市场）What is a Money MarketThe money market is a segment of the financial market in which financial instruments with high liquidity and very short maturit。