Financial markets: what beginners need to know!

Explore corporate finance, asset management, and financial markets and institutions, and how valuation, portfolio construction, mergers and acquisitions, initial public offerings, and asset pricing connect real assets and financial assets.

Explore equity as ownership with voting rights and dividends, distinguish common and preferred stock, and note residual claims and limited liability in corporate finance.

Learn how listed shares are bought through brokers, navigate bid-ask spreads, and use market, limit, and stop orders to trade on exchanges.

Explore fixed income instruments, including government bonds, corporate bonds, euro bonds, convertible bonds, and mortgage backed securities, and how securitization via SPVs creates senior, mezzanine, and equity tranches.

Explore fixed income basics through money market instruments, including treasury bills, certificates of deposit, commercial paper, euro dollar deposits, and repurchase agreements, plus secured versus unsecured bonds and callable bonds.

Explore derivatives with a focus on options, including call and put rights. Learn strike prices, expiration dates, and how long or short positions create payoffs.

Explore futures and forwards as obligations with cash or physical settlement, compare long and short positions, and reduce counterparty risk with central counterparties and daily variation margins.

Explore swaps—interest rate, forex, and equity swaps—where two parties exchange cash flows based on notional amounts, with fixed versus floating legs, defined maturities, and netting of cash flows.

Explore structured products as pre-packaged investments combining bonds, derivatives, or assets with options to create highly customized risk and return, housed in a special purpose vehicle.

Explore how short selling works as a bear strategy—borrowing securities, selling at current prices, and buying back later to profit, plus dark pools as private venues avoiding information leakage.

Explore how clearing and settlement ensure buyers receive securities and sellers receive payment via a central counterparty and central securities depository, using netting and delivery versus payment.

Compare direct and indirect finance and how intermediaries transform savers into loans. Outline commercial, investment, and central banks and their roles in deposits, lending, and interbank payments.

Learn how to construct a diversified portfolio through capital and asset allocation, securities selection, and rebalancing, and compare active and passive management approaches.

Fundamental analysis uses financial statements to estimate intrinsic value and predict future performance. It applies ratios, DuPont analysis, and market measures like price earnings ratio and market to book ratio.

Compare fundamental and technical analysis by examining stock price patterns, charts, and moving averages. Note that patterns may not reliably repeat in efficient markets, and rules are not exact.