Guide to Financial Markets (5th Edition) (The Economist)
Format: PDF / Kindle (mobi) / ePub
Recent market turbulence makes it clear just how important it is to understand the key markets. This is the definitive guide to why different markets exist, how they operate, and how they are interrelated. Extensively revised and updated, this new edition brings the reader up to date with the latest developments in financial instruments and provides a clear and incisive guide to this increasingly complex world.
market forces. The world’s main currencies now float freely against one another, creating a large demand for currency trading. Several important countries, including Mexico, Brazil and South Korea, have recently adopted floating rates after crises made managed exchange rates impossible to sustain. It would be incorrect, however, to say that exchange rates float completely freely. From time to time, one or more governments act, often without disclosing their intentions, to nudge a particular
to C$50 billion in mid-2005 because of the low interest rates on offer. Individual sweep accounts The investment companies that operate equity funds and bond funds usually provide money-market funds to house the cash that investors wish to keep available for immediate investment. People with large 40 MONEY MARKETS amounts of assets often invest in money-market instruments through sweep accounts. These are multipurpose accounts at banks or stockbrokerage firms, with the assets used for paying
by companies in emerging-market economies has not resumed, although some of these companies have made greater use of their domestic bond markets. Bond indexes The return on bonds depends greatly upon external forces, particularly interest rates. This makes it difficult to measure investment managers’ success on an absolute scale, as even the best managers will earn negative returns (lose money) when interest rates rise. Leading investment banks have therefore constructed bond indexes against
dividend paid on the shares over the past year. The dividend for the Bear, Stearns common shares has the letter “b” attached, indicating that the firm also paid a stock dividend, distributing additional shares to each of its shareholders; the “f” attached to the Becton Dickinson dividend indicates that the firm has increased its annual dividend rate. The meaning of these letters must be obtained from the footnotes to the table. Lastly, the column headed “PE” is the price/earnings ratio determined
alternative to futures contracts. Unlike users of agricultural products, users of metals are not concerned with local variations in quality. Although there are quality differences among ores, metals have been extracted from ore and processed to specific standards before they are traded in financial markets. As a result, metals users throughout the world employ a comparatively small number of contracts, and there is almost no local trading of metals futures. The London Metal Exchange, the Tokyo