For a thorough understanding of the financial activity that is so widely and prominently reported in the media, it is vital that students are able to grasp the theory and principles of the subject. With its clear and accessible exposition, this text will help students make sense of the workings of financial markets and institutions. Theory is covered only where absolutely necessary and to help students understand events as they happen in the real world, the book takes a practical, applied approach. The fourth Edition of Financial Markets and Institutions has been thoroughly updated to reflect the changes that have occurred in the financial system in recent years. The book looks at financial activity from the economist#s perspective, discussing its origin in the real economy and the need to lend and borrow to enable real investment to take place. The book also considers the shortcomings of financial markets and markets and the effect the shortcomings have on the real economy.