derivative

INTRODUCTION
Financial Market
A financial market is a broad term describing any marketplace where the buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. Financial markets are typically defined by having transparent pricing, basic regulations on trading, costs and fees, and market forces determining the prices of securities that trade.
Types of Financial Market Capital Market
 Trader in instrument with an original maturity of more than one year
 The principal goal of establishing this market is to channel savings into long-term productive investment
 Government and private sectors participated in this market
 Categorized into :
 Debt instruments (made up of bonds, common bonds or convertible bonds)
 Equity instrument (form of share certificates, either common or preferred stocks) Money Market
 Deals in short-term financial instruments whose maturity period is one year or less
 Financial instrument are most widely traded in money market.
 Three crucial features in money market :
 Low default risk
 Short term to maturity
 High marketability

Mortgage Market
 Market that provides finance for real estate
 Real estate loan issued by various types of financial institutions
 Commercial banks
 Savings bank
 Other financial institution (Cagarmas Berhad)
 Two type of mortgage securities instrument:
 Pass-through mortgage securities
 Mortgage-backed bonds

Unit Trust Market
 Essentially collective investment schemes structured to allow investors with similar investment objectives and risk tolerance to pool their savings in a common fund
 The pool can be manage by an investment company and invested in a diversified portfolio
 Involves in tripartite relationship between the fund manager, trustee and investor
 Two types of unit trust:
 Open-ended
 Closed ended

Derivative Market
 A market to enable participants in the market to offset their