Equity Investments

To help people achieve their purposes (save, borrow, raise equity, manage risk, exchange/trade assets, and use information), to discover rates of return that equate savings with borrowing, and to allocate capital to its most efficient uses.

Financial assets are claims on the assets and cash flows of others (stocks, bonds, currencies, derivatives). Real (tangible) assets are physical things such as real estate, equipment, and commodities used in production or held for value.

Primary markets are where issuers sell newly created securities to raise capital (e.g., IPOs). Secondary markets are where existing securities are traded among investors; they provide liquidity that makes primary issuance possible.

Money markets trade short-term debt instruments (maturities of one year or less, e.g., T-bills, commercial paper). Capital markets trade longer-term debt and equity instruments (maturities over one year, e.g., bonds and stocks).

Spot (cash) markets trade assets for immediate delivery and payment. Derivative markets trade contracts whose value derives from an underlying asset, rate, or index, typically for future delivery.

Exchange markets have a central, regulated venue with standardized rules and often a clearinghouse. OTC markets are decentralized dealer networks where terms can be customized and counterparty risk is more direct.