Financial Literacy Finding Your Way in the Financial Markets
Everyone should strive to improve his or her financial literacy. Better financial literacy will make you more confident when it comes to taking out a mortgage or investing your retirement savings. And it will help you understand what the developments in the financial market mean for your job or business. But improving your financial literacy is tough to do on your own. The financial system is vast and complex, which makes it virtually impossible to know where to begin learning or where to go next. And the language of finance is often confusing.
Major financial instruments, markets, and institutions, but you will also learn about all of the jobs that the financial markets do for society. You will learn why the financial markets work the way they do and why they sometimes have big problems. This course will help you see how the financial system fits into the overall economy, and it will also raise your comfort level with the many financial decisions that everyone faces
Finding Your Way in the Financial Markets
In the first lecture, you will explore whether the financial system really creates value for society. You will learn that every transaction in the financial markets performs one of six simple but important jobs that make people better off or make the economy more productive. You will also learn that the financial markets are anchored to the rest of the economy, thanks to financial contracts. You will see that every financial asset, such as a share of stock, is connected to a real asset, such as a company, by a financial contract. Another way to see how much value the financial markets create is to measure financial wealth. In the second lecture, you will learn how much
Financial Literacy Finding Your Way in the Financial Markets. value is stored in financial assets and why the amount of money moving through the financial market is the key determinant of the amount of wealth. You will learn who lends out the money coursing through the financial markets and who ends up with the wealth that the markets generally. To complete your introduction to the financial system, you will learn about one of the most important ingredients that go into every financial product: information.
You will see how information is a scarce resource that limits how well the financial system can perform its six jobs for society. You will learn about two fundamental problems caused by limited information and how the financial system can mitigate but never quite solve them. You will build on this introduction to the financial system by examining the function of borrowing and lending, one of the most important tasks in the financial system. Over the course of several lectures, you will learn about the lending process, the main lenders in the economy, and the main instruments used for borrowing and lending. You will learn how lenders decide whether to accept a loan application, and you will review the details of loan contracts. You will take an in-depth look at the main lending institution—banks—and learn why they dominate most countries’ financial systems.
Borrowing and Lending Money Without Banks
You will learn about the many ways that borrowing and lending take place without banks. For example, you will learn how bonds and stocks each represent a special kind of loan. You will explore a huge but often overlooked lending market called the money market. And you will also look at lending from an international angle, which often involves foreign currencies and the foreign exchange markets as well. To complete your tour of this topic, you will also learn how financial instruments like stocks and bonds make it into the hands of investors, with the help of investment banks.
Once you have learned how financial instruments like stocks and bonds get into the market, you naturally think of the next step: trading. You will learn about the different ways that trading can take place and the diverse set of markets that various financial instruments are traded on. You will also learn about the traders themselves, including a comprehensive look at two of the most famous kinds of trading companies—mutual funds and hedge funds.
And no discussion of trading is complete without mergers and acquisitions.
You will learn how entire companies are traded on the so-called market for corporate control.
The discussion of trading also presents the perfect time to discuss how financial prices and returns are quoted and calculated. Then, you will move to one of the toughest questions in finance: Who or what actually determines the prices of all these instruments? Of course, information has a big influence over prices, so this course will devote several lectures to the major sources of information that move the financial markets. You will learn which information reported by companies is the most valuable to the markets as well as which economic indicators are the most anticipated. Interest rates are another type of financial price that you will learn about. Not only are they interested in themselves, but you will see that they also contain a wealth of information about the market. A discussion of central banks like the Federal Reserve complements the lecture on interest rates. You will learn about the important role that central banks play in the financial system, focusing on how they influence the financial markets because of their power over interest rates and the money supply.
Strategies for Managing Finacial Rist
The course also includes several advanced topics that rely on the ideas developed earlier in the course. You will learn about the main financial risks that all players face and the main strategies for managing these risks. Youwill learn about the process of securitization and Fannie Mae’s role in it.
You will also learn why the financial markets need regulation and who is supplying that regulation. In the final lecture of the course, you will use what you have learned throughout the course to think about the future of the financial markets. You will learn about two major trends that are likely to change how you will use the financial markets in the future—and how the markets will affect you as well.
This course provides a foundation of knowledge that will enable you to work independently to keep improving your financial literacy.
“Master Class Personal Finance. eLearning Course How Money Works”