Explain how securities are bought and sold. List agencies that regulate financial markets. Discuss factors that affect the price of investments. Explain that a financial market is a place where investors buy or sell financial products such as stocks, bonds and futures contracts. Securities markets deal primarily with stocks and bonds Stocks represent ownership in a company or government.
Bonds represent a loan to a company or government.
With bonds, you loan money to the company or government and are paid a fixed interest rate. Interested investors receive a prospectus, which provides information about the company and the stock being issued. The potential buyer places an order with a broker. Some stocks can be purchased directly from the company or via the World Wide Web. Stocks and bonds can also be sold through mutual funds that involve professional managers and additional fees.