The significance of developing financial markets

First financing, such as companies going public and issuing stocks and bonds, etc., can solve the national financial crisis for companies with development potential and make the company's capital sufficient.

Second, hedging risks, industrial companies use futures market hedging to hedge losses caused by falling or rising commodity prices.

The third is to balance the allocation of funds in various industries. If some industries have excess funds within a specific period of time, banks will lend money to industries that are short of funds.

The three major themes of monetary finance research: currency, Banks and financial markets.

Macroeconomics - Monetary Economics - Monetary Finance

Microeconomics - Financial Economics - Asset Pricing/Corporate Finance

In On the evening news, you just learned that the Federal Reserve raised the federal funds rate by half a percentage point. If you're getting a loan to buy a nice new sports car, do you know how that will affect your car loan interest rate? Does this mean your ability to afford a home purchase will become stronger or weaker in the future? Will it be easier or harder for you to find a job next year?

1. Why study financial markets?

1. What is a financial market?

Securities market, bond market, bank lending market, etc.

2. Why study financial markets?

Improve economic efficiency;

Influence the wealth and behavior of individuals/enterprises.

3. Bond market and interest rates

The bond market can help companies and governments raise operating funds and determine interest rates, which is of great significance to economic operations.

Practical Application

If you were the CFO of a large company, in the following situations, which of the following financial markets would your company use: the bond market, the stock market, or Forex market? Explain the specific reasons.

1. Your company has $100 million and plans to use the funds to build a factory in Germany.

2. Your company plans to borrow US$100 million to build a factory in the United States.

3. Your company hopes to raise US$100 million to build a factory by selling part of the company's ownership. In other words, your company hopes to attract new partners.