What is Credit? What is a loan? How do financial markets work?

Credit is the ability to borrow money from a financial institution to purchase goods or services.

A loan is an amount of money borrowed by an individual or business from a bank or other financial institution.

Financial markets are organized exchanges where buyers and sellers of financial instruments, such as stocks, bonds, and derivatives, can trade.

The stock market is a financial market in which shares of publicly traded companies are bought and sold.

Bond markets involve the trading of debt securities issued by corporations and governments.

Derivatives markets enable the trading of derivatives such as futures, options, and swaps.

Money markets involve the trading of short-term debt instruments such as Treasury bills, commercial paper, and certificates of deposit.

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