How the Financial Markets Really Work

Overview and Introduction

· Functions of the world’s Financial Markets – Transferring Funds and Risk

· What are efficient Markets? Markets as forward discounting mechanisms

· Role of the Regulator

· Sell-Side (Investment Banks) vs Buy-Side (Institutional Investors)

Foreign Exchange Markets

· Overview and scale of the FX markets

· Currency Popularity - Dollars, Euro, Sterling, Yen.

· Spot, Cross and Forward Exchange rates; Interest Rates and Carry Trades

The Bond Markets

· Fixed Income basics – what is a Bond exactly?

· The importance of Sovereign Debt Markets, Risk free investing?

· Bond Pricing – Coupons and Yields

· Sub-Prime & the Credit Crunch explained

· Corporate Bonds and Credit Ratings – importance of the Rating Agencies

The Equity Markets

· Equities in context – Shareholders at the end of the food chain

· Corporate actions in the secondary markets – Share Splits, Rights Issues

· What makes shares go up and down?

· Equity Pricing explained – Price/Earnings Ratios, Dividend Yields

Commodities and Derivatives Markets - Options, Swaps, Futures

. Derivatives, what are they exactly? Exchange Traded vs OTC

· Options – Terminology, for Hedging or Speculation?

· Swaps – Interest Rate and Credit Default swaps; importance of counterparty risk

· Futures – Margin requirements and Leverage – Risk and exposure, role of the Clearing House