GS - Intro to Capital Mkt

Capital markets are

• where capital (money) is transferred from people who need it (investors) to people who have it (issuers).

• where capital (money) is transferred from people who have it (investors) to people who need it (issuers).

• where capital (money) is transferred from people who don't have it (investors) to people who don't need it (issuers).

Investors require return from their investments in the form of

• Increased risk

• Capital loss

• Income (dividends or interests)

OTC trading means

• centralized market place for financial instruments

• trades being negotiated between two parties on a bilateral basis

Markets that trade mainly OTC are

• Equities

• Public bonds

• Foreign Exchange

Exchange traded products are usually

• customized, tailor-made contracts

• meant for professionals

• very large in size

• heavily regulated

What is the main revenue source for flow traders?

• Fees

• Spread

• Capital gains on positions

Which is not an electronic execution system?

• Electronic Communication Network

• Chi-X

• NASDAQ

• Bloomberg

Quote-driven market exhibits the below

• Dealer quotes to buy & sell

• Trader quotes to buy & sell

• Limit orders provide market liquidity