ABSTRACT
This chapter introduces financial markets and discusses some important terms used to describe them. Healthy economies have stable, growing, and developing financial markets. Financial markets can be separated into two major parts, debt and equity. Debt markets are where interest-earning financial instruments are bought and sold. The interest rates on these instruments may be fixed until maturity or variable, in which case they depend on evolving market conditions. Equity markets, which are often called stock markets, are where partial ownership claims on companies are bought and sold. Financial markets are often described by the maturity of the instruments issued and traded. Money markets are where financial assets with maturities less than or equal to one year are bought and sold. Stock prices are reported daily in the business news and actively followed by a broad spectrum of interested onlookers. The return on alternative investment assets has an inverse relationship with a stock's price.
