Recommended articles: Financial Markets and Tips to Learning Finance

Financial Markets:

1. Methods for pricing options in the 19th century. Option trading has grown phenomenally in the last 40 years, but option markets have existed since the early 17th century. This column reviews an option trading manual written by a London trader in 1906. It shows that traders in the 19th century developed sophisticated techniques for determining the prices of short-term calls and puts. They also priced at-the-money-forward straddles the same way they are priced today (VOX).
2. Enhanced statistics on cashless payments and financial market infrastructures (BIS).
3. Monopoly without a Monopolist: An Economic Analysis of the Bitcoin Payment System. Owned by nobody and controlled by an almost immutable protocol the Bitcoin payment system is a platform with two main constituencies: users and profit seeking miners who maintain the system’s infrastructure. The paper seeks to understand the economics of the system: How does the system raise revenue to pay for its infrastructure? How are usage fees determined? How much infrastructure is deployed? What are the implications of changing parameters in the protocol? A simplified economic model that captures the system’s properties answers these questions. Transaction fees and infrastructure level are determined in an equilibrium of a congestion queueing game derived from the system’s limited throughput. The system eliminates dead-weight loss from monopoly, but introduces other inefficiencies and requires congestion to raise revenue and fund infrastructure. We explore the future potential of such systems and provide design suggestions (paper).
4. Market liquidity after the financial crisis. The potential adverse effects of regulation on market liquidity in the post-crisis period continue to receive significant attention. This column shows that dealer balance sheets have continued to stagnate and that various measures point to less abundant funding liquidity. Nonetheless, there is little evidence of a wide-spread deterioration in market liquidity. Liquidity remained resilient even during stress events like the 2013 ‘temper tantrum’ (VOX).
5. The new dynamics of financial globalization. Cross-border capital flows have fallen 65 percent since the financial crisis as global banks retrenched, but a more stable form of financial globalization is emerging (McKinsey Report).

Learning by WallStreetMojo:

1. Time Value Of Money: Top Real Life Examples and Formula.
2. Sharpe Ratio: Comprehensive Guide With Excel Examples.
3. Risk Adjusted Return: Top 6 Risk Ratios You Must Know!
4. Call Options Vs Put Options: Top 5 Differences You Must Know!