What Is the Market?

The most common use of the term “market” is a place where buyers and sellers meet. As mentioned in Chapter 1, a supermarket, a flower market or a flea market are good examples of these. They are easy to visualize because they are physical places where people go in order to buy or sell physical items such as flowers or old furniture. Financial markets are harder to visualize because they don’t refer to a physical place, nor do they refer to a physical product. Financial market participants don’t need to physically go to a trading floor to walk away with a treasury bond or an interest rate swap or an equity option. Also, there is not one place that financial market participants meet to buy and sell any one financial product. ...

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