Pages: 81

No chapter abstract available.

Pages: 24

This chapter relates to financial markets a number of assumptions, economic, financial as well as psychological fallacies that render the thinking process and ultimately the decision made either incorrect or invalid. Several well-known and useful economic laws or principles are presented. We discuss some very important economic assumptions in order to properly study economic events and phenomena and ‘predict’ the outcome from one or many changes in the variables. These basic, implicit economic assumptions are necessary when discussing economic/financial news and events and when involving entities, markets and individuals. We also present several fallacies or biases that humans have suffered from all of which lead to incomplete, incorrect or even misleading decisions. We categorize them into economic, financial and psychological aspects.

Pages: 31

What is corporate finance? Corporate finance explains the way funds are raised and used best, in order to maximize profits or shareholder wealth. What is the role of the financial manager? In general, the financial manager performs two major functions within an organization: financing and investing. The aim of this chapter is to acquaint you with essential financial concepts that would enable you to understand the functions of the global financial market and permit you to interpret and exploit them effectively and, perhaps, profitably.

Pages: 23

In this chapter, we provide a very brief overview of the global financial markets, their instruments and their institutions. Then, we present the banking system which includes the central bank(s) (including major central banks) and the member banks. Finally, we will be presenting and discussing selected current events from the various sides of the financial markets and placing them in the context of how agents (market participants) can deal with these events.

Pages: 91

No chapter abstract available.

Pages: 19

The objective of this chapter is to introduce the reader to the global money market. We present and explain the characteristics of the international money market(s), its functions, and cast a detailed look at some money market functions. Finally, we show you how you can use the international money markets in investing and, in part, trading.

Pages: 34

This chapter continues the previous chapter by introducing the global money market instruments, their features and purpose. Also, the chapter briefly discusses various important depository financial intermediaries (institutions) from various angles, and ends with a demonstration of how you can exploit these money market instruments (as an investor).

Pages: 35

The first part of the chapter discusses the investment company industry and its relevance (significance) to the average investor. The second part involves a detailed discussion of another financial industry, the investment banking industry, which is also very important in the money as well as the capital markets. This segment of the financial services industry is key to serving the needs of institutional investors such as firms, governments and companies when these investors need to engage in mergers, acquisitions or raise capital. The chapter ends with a section on investor investment perspectives (insights) in these two financial services industries.

Pages: 121

No chapter abstract available.

Pages: 24

In this chapter, we explain the types of equity, their characteristics, how one can purchase equity, how we value equity, the theories underlying stock markets and the trends and developments in that market. Specifically, we explore additional characteristics of the stock market such as the organized and over-the-counter types, some of its functions including transparency and continuity. We also mention and briefly explain some important stock market exchanges such as the DJIA, NYSE, AMEX and NASDAQ. Furthermore, we discuss the market makers in the stock exchanges such as dealers and specialists, showed how you can value a stock. Next, we present some stock market theories including the random walk, the greater fool, the firm foundation and the efficient markets theories. We end the chapter with a list of important trends and new developments in the stock market such as artificial intelligence, institutional and regulatory changes.

Pages: 36

Analyzing the stock market is a daunting task! This endeavor involves various methods and tools to understand market trends, evaluate individual stocks, and make informed investment decisions. In this chapter, we offer an overview of the key approaches including fundamental and technical analyses, behavioral, econometric and more. Each approach has its own strengths and can be used independently or in combination with others for a more comprehensive analysis. Throughout the chapter, we provide real examples of stock-market behavior with proper analysis (and simple strategies) for the novice investor. Finally, the last section deals with a detailed look at correlations among equity instruments and their implications for portfolio construction (using real data).

Pages: 30

This chapter presents the fixed-income market, its properties, its functions, the types of securities traded in the global fixed-income market, bond valuation and a section on how investors use the fixed-income market. Specifically, this last section contains several bond-portfolio management strategies which can be applied by an individual investor.

Pages: 29

In this chapter, we go deeper in showing how one can exploit the bond market by providing strategies, market analyses, algebraic examples and more. In general, investors can use the global bond market to achieve a variety of financial goals, including income generation, portfolio diversification, capital preservation, and hedging, against various types of risks. Essentially, leveraging the vast and diverse global fixed-income landscape to find opportunities offering higher yields or better risk-adjusted returns compared to their domestic market alone. The global bond market offers opportunities across different sectors, maturities, currencies, countries, and risk profiles, enabling investors to optimize their strategies. Finally, we show how an investor can interpret and act on various news from central banks, the government, the corporate sector and the rest of the world.

Pages: 89

No chapter abstract available.

Pages: 25

This chapter deals with the derivatives and commodities markets. We begin with the main characteristics of each of these markets and proceed with the listing of the determinants of each market. For example, we understand the roles of the underlying assets, market and asset volatility, interest rates and other macro indicators, market sentiment, market liquidity and regulation among many other determinants. Next, we address the interesting question of why people trade in these markets. We provide a number of real-world examples of hedging and speculating in these markets. Finally, we discuss the roles of management and marketing in the derivatives and commodities markets. We end this chapter with a look at the roles of management and marketing in the derivatives and commodities markets.

Pages: 28

In this chapter, we discuss at length the foreign exchange (forex) market. We begin with the features of the forex market and then explain the factors (variables) of exchange-rate determination. Specifically, we identify inflation rates, interest rates, income levels and government policies, among other determinants. Next, we present some important economic international parities that are essential in understanding how exchange rates move. To that end, we present the interest rate parity, the purchasing power parity and the international Fisher effect. We illustrate some of these parities via real-data examples and interpret the findings. In addition, we present some important forex strategies carry trade and speculating/hedging with options and futures and continue with some other arbitrage strategies such as locational, triangular, and the covered interest arbitrage and the uncovered interest rate parity. We end the chapter with the discussion on exchange-rate forecasting by illustrating forecasting techniques such as fundamental and technical forecasting methods.

Pages: 17

This chapter discuses financial technology (FinTech) and its connection/role in the global financial markets. We begin with the brief presentation of several categories of FinTech products such as business-to-business, business-to-consumer, peer-to-peer, the Internet of Things and many more. We continue with the understanding of the interplay between FinTech and financial markets by exploring its key relationships. More specifically, we discuss market access and inclusion, capital market efficiency, disintermediation, regulation and more and explain some of them via several examples using the stock market, the fixed-income market, monetary policy and more. We briefly mention the recent innovation about central bank digital currencies as opposed to cryptocurrencies. We conclude the chapter with some discussion on the linkages between FinTech and global financial services citing academic evidence.

Pages: 15

We begin this final chapter with the recognition that global financial markets face a variety of risks that can impact their stability and performance. Then, we identify and briefly discuss some very important and timely global risks such as geopolitical, macroeconomic and systemic, environmental, technological, behavioral, regulatory, socio-cultural and more. Next, we categorize the above-mentioned risks into short-term – which last a couple of years maximum and generate volatility in the markets – and long-term – which entail structural, fundamental shifts in an economy and the world business model(s). We end the chapter with a discussion of how retail investors cope with global risks when operating in (dealing with) the financial markets.