Finance markets are classified as primary (direct) and secondary (indirect). The primary markets deal in new finance claims or new securities. On the other hand, secondary markets deal in securities already issued or existing or outstanding. More often the classification is into money and capital markets. Money market deals with short-term claims having a period of maturity of one year or less and the latter does so with long-term claims having period of maturity of more than one year.

Stock Markets
A market in which shares of stock are bought and sold is called stock market. The word ‘stock’, in American usage, means equity or ownership in a corporation. A share is the basic unit of a company’s capital, which it tries to raise from the stock market. When you own a stock, you are referred to as a share or stockholder. A stock shows that you own a small fraction of a corporation; hence if you buy stock in the Pepsi Corporation and they come out with a ‘hot’ new drink, then you get to share the profits. A stock also gives you the right to make decisions that may influence the company. Each stock you own gives you a vote/s, so the more stocks you own, the more decision-making power you have.

Forex market
Foreign Exchange is the simultaneous buying of one currency and selling of another. The foreign exchange market is the largest finance market in the world. The world’s currencies are on a floating exchange rate and are always traded in pairs. Here, settlement is made for international purchases and sales, i.e., for exports and imports, as also for payments international purchases and sales of assets. Operating virtually round the clock, the forex market trades enormous amounts of money, estimated at several trillion dollars daily.

The forex market is not centrally located. It is an over-the-counter market where business is conducted through telephones, computers, fax machines etc. Among its members are large corporations, commercial banks, money centers, pension funds and investment banking firms. As individuals or companies from one country trade across borders, the need for foreign currency arises. The resultant trading differential generates profits and keeps the forex market in animation.

Debt Market
Debt is the liability or obligation in the form of bonds, loan notes, or mortgages, owed to another person or persons and required to be paid by a specified date (maturity).

It is one in which mainly debt is transacted which could be in the form of debt instruments or cash. In the first place, there is the money market a huge market trading in debt instruments with an original maturity of one year or less. Typical instruments here include Treasury Bills, bank certificates of deposits etc. Secondly, there is the bond market in which long-term debt obligations are traded. As such, the bond market is the long-term complement to the money market.

I. The Money Market:
In this, the short-term surpluses of finance and other institutions and individuals are bid by borrowers comprising institutions and individuals and also by the Government. Thus the short-term requirements of borrowers are met lenders get liquidity. In other words, a money market is one in which short-term funds are borrowed and lent. The borrowers are traders, speculators, brokers and producers of various commodities as well as government and institutional borrowers. The lenders include commercial banks, insurance companies and other institutional borrowers.

II. The Bond Market:
Bond market is the market for all types of bonds, whether on an exchange or over-the-counter. A bond is a debt instrument. An example of a bond can be a debenture. The following are the terms mostly used in the bond market.
Bond Term: The term of the bond is the number of years between the date it was initially issued and the date it matures.
Current Yield: A current yield is simply the yearly amount you receive in coupon income dividend by the market value of your bond. The current yield does not take into account the timing of coupon interest or the interest you might earn when you invest your coupon income.