Financial Markets Explained

Learn about the economy and the markets in general as we present a comprehensive explanation of the most commonly used jargon.

What is happening to the bond markets after a Trump victory?

What is happening to the bond markets after a Trump victory?

Financial Markets Explained
The bond markets were in the news for the two straight weeks since the U.S elections held on November 8th 2016. After an initial rally, bond markets fell sharply and continued to fall in the following days making it one of the most talked about asset in the financial media. It wasn't just U.S bonds but also across the world, including Japan and Europe. For example, yields on the 10-year government bonds in Japan rose to 0.035% on Friday, November 18th, 2016, up from 0.005% just the day before. It was the first time that yields rose. Even far flung economies such as Singapore, Malaysia, Thailand, bond yields spiked. In bonds, yields run inversely to prices; meaning that when bond prices fall, yields rise. Learn the basics of bonds here. Blame Trump's policies for rise in bond
What are bonds. How to trade bonds online

What are bonds. How to trade bonds online

Financial Markets Explained
Bonds are the lesser known financial investment products in comparison to stocks or forex. This is largely thanks to the fact that trading in bonds offer high level of security and low returns as compared to stocks which works in the opposite. The most important thing to know about bonds is that they work the same way as loans albeit on a larger scale and volume. Bonds are debt instruments, as compared to stocks which are equity instruments. During bankruptcy, bond holders are given preference before equity holders. This is also known as seniority. Seniority pertains to the order of repayment in the event of a sale or bankruptcy of the issuer. As a thumb rule, senior debt holders must be repaid first before repaying subordinated or junior debt. What are bonds A bond is basically a deb
How does money disappear in a stock market crash

How does money disappear in a stock market crash

Financial Markets Explained
Where does money go when markets crash? "Brexit crash wiped out a record $3 trillion," the headlines screamed after the UK voted to leave the EU. It is not uncommon to read such headlines in the financial media which usually comes following a stock market crash. But what exactly does it mean? Where was the $3 trillion to begin with and how can money just disappear into thin air? In a stock market collapse do people really lose their pension and invested money? Who gets the lost money? Certainly the lost money can't just vaporize can it? A quick answer to the above question is "There was no $3 trillion to begin with." Read on below to get a more clear understanding of how money works in the stock market and more importantly how money is said to disappear during a stock market crash
Difference between Money and Currency explained

Difference between Money and Currency explained

Financial Markets Explained
Money and currency are often interchanged and used loosely. But what is money and what is currency? What are the differences between money and currency? If you were asked, “how much money does it take to buy a car” your typical answer would be, “You can buy the car for $50,000” What you mean by that is that you value your car at 50,000 US dollars. What if the buyer was from Germany? Your German customer will still pay you 50,000 US dollars, but in effect he is paying you €45,454 (at a EURUSD exchange rate of $1.10, or where 1 US dollar is equal to 1.10 euro). As you can see, the money value remains the same, but the currency value changes. Money is therefore a store of value, currency is a form of exchanging this value. What is money? Money is a term that is loosely used and is
What is ‘Helicopter Money’ Policy?

What is ‘Helicopter Money’ Policy?

Financial Markets Explained
Helicopter Money is a proposed alternative in the world of easy monetary policy. One could be forgiven to mistake the term as a phenomenon where loads of money is simply dropped from a Helicopter. Helicopter Money is seen by many critics as the next step after Quantitative Easing. Helicopter Money, although might seem new to many has been around for years. The term is attributed to Milton Friedman and his parable of 'Helicopter drop of money' in 1969. “Let us suppose now that one day a helicopter flies over this community and drops an additional $1000 in bills from the sky, .... Let us suppose further that everyone is convinced that this is a unique event which will never be repeated,” (Friedman 1969, pp 4–5) In this article you will learn how helicopter money works, how it can be implem