UNIT 2: FINANCIAL MARKETS AND INTEREST RATES
INTRODUCTION
In Unit One, we introduced the basic financial operations and general financial structure of
a company. In that context, we discussed the two types of capital that a company can access
for its operations: debt and equity. We will now focus our discussion on the sources of
capital and the process for calculating its value. In this unit, we look at the types of
financial markets and the market participants. We introduce the factors that make up a
quoted interest rate and the characteristics that affect the level of interest rates over time.
UNIT
OBJECTIVES
When you complete this unit, you will be able to:
·
Recognize the types of participants in the financial markets
·
Differentiate between money markets and capital markets
·
Differentiate between bond (debt) markets and equity markets
·
Identify the factors that influence interest rates
·
Understand the term structure of interest rates