1. International Financial Markets
The international capital market
A capital market is a system that allocates financial resources in the forms of debt and equity according to their most efficient uses.
National vs. International capital markets
The foreign exchange market
Market in which currencies are bought and sold and in which currency prices are determined.

2. Purposes of National Capital Markets
The Role
of Debt
of Equity

3. Purposes of the International Capital Market
Expanding the Money Supply
Reducing the Cost of Money
Minimizing Investor Risk

4. Capital Market Expansion Forces
Information
Technology
Capital
Market
Expansion
Forces
Deregulation
Financial
Instruments

5. Debt Flowing Into Emerging Markets
(nongovernment debt) (U.S. $ billions)
Private Debt Flow
Year

6. Non-FDI Flows Into Emerging Markets
(nondirect investment) (U.S. $ billions)
Flow of Portfolio Equity
Year

7. Eurocurrency Market Typical Buyers Patterns of Growth Risks and
Rewards

8. Functions of the Foreign Exchange Market
Currency Conversion
Currency Hedging
Currency Arbitrage
Interest Arbitrage
Currency Speculation