{"id":117,"date":"2023-05-30T15:55:45","date_gmt":"2023-05-30T15:55:45","guid":{"rendered":"https:\/\/www.trainy.co\/blog\/?p=117"},"modified":"2023-05-30T15:55:45","modified_gmt":"2023-05-30T15:55:45","slug":"understanding-financial-markets","status":"publish","type":"post","link":"https:\/\/www.trainy.co\/blog\/en\/understanding-financial-markets\/","title":{"rendered":"Understanding financial markets"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Financial markets are <b>places where liquidity-surplus economic agents<\/b> (those with surplus cash) <b>meet liquidity-deficient economic agents<\/b> (those who lack or need cash for their activities). Financial markets enable and facilitate these players to meet. What&rsquo;s more, financial markets will enable the diversification of exchanges and the allocation of resources.<o:p><\/o:p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Once physical places, today&rsquo;s financial markets are almost all completely dematerialized and resemble computer networks interconnected worldwide.<o:p><\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><b>Read more:&nbsp;<\/b><b><a href=\"https:\/\/www.planetegrandesecoles.com\/stages-finance-spring-insight-summer-off-cycle-graduate\">Finance internships: Spring insight, summer, off-cycle, graduate<\/a><\/b><b><o:p><\/o:p><\/b><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\">&nbsp;<\/p>\n\n\n\n<h2 class=\"MsoNormal wp-block-heading\"><b>Primary and secondary markets: definition and example<o:p><\/o:p><\/b><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In the primary market, companies sell new stocks and bonds to the public for the first time, such as with an initial public offering (IPO). In fact, when products are issued for the first time (shares, bonds, etc.), they are said to trade on the primary market.<o:p><\/o:p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The secondary market is basically the stock market and refers to the New York Stock Exchange, the Nasdaq, and other exchanges worldwide. On the secondary market, securities are traded at a price determined by supply and demand.<o:p><\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\">&nbsp;<\/p>\n\n\n\n<h2 class=\"MsoNormal wp-block-heading\"><b>Safe-haven assets: definition and example<o:p><\/o:p><\/b><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A safe haven asset is&nbsp;one which is expected to maintain or increase in value during periods of economic uncertainty and market turbulence.&nbsp;Gold can be considered a safe haven par excellence for investors.<o:p><\/o:p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With the covid crisis, the value of gold has soared by +50% in 5 years.<o:p><\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\">&nbsp;<\/p>\n\n\n\n<h2 class=\"MsoNormal wp-block-heading\"><b>The various categories of financial assets<o:p><\/o:p><\/b><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are several asset classes. These include:<o:p><\/o:p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n\n\n\n<li class=\"MsoNormal\">The <b>Equity market<\/b>, comprising equities, certain indices, ETFs and funds.<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\">The<b>Fixed Income market,<\/b> comprising everything to do with bonds, interest rates, credit, certain ETFs and funds.<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\">The <b>Commodities market<\/b>, covering natural resources and commodities (gas, oil, soy, coffee, sugar, etc.).<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\">The <b>FX<\/b> or <b>Foreign Exchange market,<\/b> which includes currencies and their exchange rates.<\/li>\n\n\n\n<\/ul>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><b>Read more:&nbsp;<\/b><b><a href=\"https:\/\/www.trainy.co\/en\/blog\/11\/market-or-corporate-finance\">Market or corporate finance ?<\/a><\/b><b><o:p><\/o:p><\/b><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<h2 class=\"MsoNormal wp-block-heading\"><b>Financial risks<o:p><\/o:p><\/b><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Among the various risks in finance, we can mention the following:<o:p><\/o:p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n\n\n\n<li class=\"MsoNormal\"><b>Market risk<\/b>: the fact that the evolution of a financial asset is adverse to your position (e.g. if you buy a share and the share price falls).<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\"><b>Liquidity risk<\/b>: the fact that you may not be able to sell your investment within the normal timeframe, or at a lower price. This is usually the case when a crisis occurs. (Example: for a company, liquidity risk is when its cash position no longer allows it to meet its short-term receivables).<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\"><b>Counterparty risk<\/b>: the fact that the counterparty you have contracted with is unable to meet its commitments to you.<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\"><b>Credit risk<\/b>: the fact that an entity in which you have an interest may default or go bankrupt.<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\"><b>Operational risk<\/b>: for example, if you place an order for EUR 1,000,000 on the market when the order was for EUR 100,000. When the error is corrected, the entity may have lost money!<\/li>\n\n\n\n\n\n\n<li class=\"MsoNormal\"><b>Reputational risk<\/b>: This is the financial risk incurred by companies or financial institutions regarding their image. (For example, the case of Volkswagen, the flagship of German industry renowned for its respect for the environment, accused of having fitted some of its cars with a system enabling them to conceal the real level of pollutant gas emissions).<\/li>\n\n\n\n<\/ul>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><o:p>&nbsp;<\/o:p><\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\">&nbsp;<\/p>\n\n\n\n<p class=\"MsoNormal wp-block-paragraph\"><b>Read more:&nbsp;<\/b><b><a href=\"https:\/\/www.trainy.co\/en\/blog\/59\/movies-financial-scandals\">5 movies about financial scandals<\/a><\/b><b>&nbsp;<o:p><\/o:p><\/b><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Financial markets are a meeting place for economic agents with excess liquidity and economic agents with a shortage of liquidity.<\/p>\n","protected":false},"author":3,"featured_media":635,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[17],"tags":[],"class_list":["post-117","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/posts\/117","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/comments?post=117"}],"version-history":[{"count":0,"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/posts\/117\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/media\/635"}],"wp:attachment":[{"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/media?parent=117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/categories?post=117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.trainy.co\/blog\/wp-json\/wp\/v2\/tags?post=117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}