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How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

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Page 1: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

commercial paper

currencies

stocks

mortgages

loans

bonds

Page 2: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 3: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 4: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 5: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 6: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 7: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

Investment BanksBrokeragesInsurance CompaniesPension FundsMutual FundsHedge Funds(Foreign Governments)

How the Financial Markets Fit into the Economy and How They Work

Page 8: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Investor # of shares %

1999) James Rolle ………………………………………. 100 .0000001642000) Dr Seuss ……………………………………….. 100 .000000164

Page 9: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

$125.90

Page 10: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 11: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 12: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 13: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Commercial Paper

Page 14: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 15: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 16: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 17: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 18: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 19: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

Credit RiskMoody's

Standard and Poor's

Fitch Ratings

Investment Grade      

Highest Quality Aaa AAA AAA

High Quality Aa AA AA

Upper Medium A A A

Medium Baa BBB BBB

Not Investment Grade      

Lower Medium Ba BB BB

Lower Grade B B B

Poor Grade Caa CCC CCC

Speculative Ca CC CC

No Payments / Bankruptcy C D C

In Default C D D

How the Financial Markets Fit into the Economy and How They Work

Page 20: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 21: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 22: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 23: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 24: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

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Page 25: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 26: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

How big are these markets anyway?

US EconomyStock ValueGovernment DebtMortgage-backed SecuritiesCorporate BondsBank LoansCommercial Paper

$13 trillion annually 8.8 trillion* total 6.4 trillion (11) total 6 trillion total 3.6 trillion total 3.3 trillion total 1.5 trillion total

Currencies/Foreign Exchange 2.0 trillion daily

Page 27: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

$

Page 28: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Page 29: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Real Estate Prices

Page 30: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work

Commodity Prices

Page 31: How the Financial Markets Fit into the Economy and How They Work commercial paper currencies stocks mortgages loans bonds

How the Financial Markets Fit into the Economy and How They Work