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Financial Market : Laura looks to the financial markets to find the investment that provides the best return over the next 9-12 months on the USD 400,000 in excess cash.
In the equity capital markets, equity securities, commonly known as shares of stock, are traded. Most equity securities are common stock, which does not oblige the issuer to pay dividends or to make any other payments. Equity securities are very long-term in nature and represent ongoing, perpetual ownership interest.
Long-term debt securities are traded in the debt capital markets. A debt security, such as a bond or note, is a long-term contractual obligation whereby the issuer promises to pay interest and repay the face amount of principal in total on one maturity date or in installments over various dates. Bonds, in particular, can be very long-term in nature, with some bonds maturing up to 30 years in the future.
In the foreign exchange markets, the currencies of the world are traded for one another. These markets facilitate currency transactions that allow companies in different countries to do business with each other.
The money markets are where short-term funds are bought, sold, borrowed, and lent on a wholesale basis. In contrast to the much longer maturities in the capital markets, the instruments traded in the money markets have maturities of one year or less.

ROLE OF GOVT: The money markets serve as a vehicle for governments and central banks to carry out fiscal and monetary policy. Fiscal policy involves the use of government's taxation and spending policies to achieve macroeconomic goals, such as sustainable growth rates, price stability, and high employment.
In the United States, the president and Congress carry out fiscal policy. Each year, the president proposes a budget to Congress. To execute the fiscal policy contained in the budget, the