Investors do not like risk and they must be compensated for taking on risk—the larger the risk, the more the compensation.

Secondary markets are also classified in terms of organized exchanges and over-the-counter (OTC) markets.

Secondary markets are categorized based on the way in which they are traded, referred to as market structure.

There are different regulatory requirements for securities that are issued to the general investing public and those that are privately placed.

The public market offering of new issues typically involves the use of an investment bank.

When a financial instrument is first issued, it is sold in the primary market.

Financial markets are classified in terms of cash market and derivative markets.

The capital market is the sector of the financial market where long-term financial instruments issued by corporations and governments trade.

The money market is the sector of the financial market that includes financial instruments that have a maturity or redemption date that is one year or less at the time of issuance.

From the perspective of a given country, its financial market can be broken down into an internal market and an external market.