The United States of American Bond Market - Thesis Example

The organizations that are in need of capital include the government who needs to pay for their projects, businesses for their business growth, and any other work in progress. In the bond market, there are two types of markets that enhance the buying and selling of securities. The first type of market is the primary market or also called traded debt security market (Beck, Demirgüç & Levine, 2009). The primary market allows the participant in the market to sell and buy new securities.

The second type of market is the secondary market. This is the market that gives the participant a chance to trade the existing securities in the market. The primary goal and objective of the market are to avail long-term financial assistance and funding to the public and the private sector (Balduzzi, Elton & Green, 2012). In addition, like any other market, the bond market has participants. The participants can either be the sellers of securities or the buyers of securities. The participants, in particular, are the traders, organizational investors, the government, and the individuals who buy securities from the big originations.

The products that are bought from these big organizations include life insurance, pension funds, and mutual funds. The participants in the bond market, trade on different types of bonds to enhance the efficiency and effectiveness of the bond market. To encourage simple and fast trading of the bonds in the market, the bonds are classified into different categories (Balduzzi, Elton & Green, 2012). The categories include asset-backed bonds, municipal bonds, collateral debt obligation bonds, corporate bonds, mortgage-backed bonds, and government and agency bonds.

The mortgage bonds are the pooled bonds on the real estate securities. They are the bonds