The unique feature of the subject matter in this book, as well as the other books in this set, is that we are describing the activities related to and in support of trading in instruments—stocks, bonds, options, futures, currencies, and commodities. We divide instruments in further ways.

Securities (stocks and bonds) are instruments used to raise money for entities. We categorize securities as an important subdivision of a larger category of cash markets. In addition to securities, cash markets include trading in currencies and commodities. In effect, we mean by cash market that we are actually buying a thing—a stock, a bond, and so on. We contrast cash markets with derivatives.1

Derivatives are instruments that derive their value from ...

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