Financial Markets Assignment Help

Financial markets refer to the marketplace, where buyers and sellers can trade financial securities, bonds, commodities, currencies and derivatives. Financial markets are basically defined as the markets which have transparency in pricing, regulations on trading, costs and fees and market forces determining the prices of securities that trade.

The Financial markets have both the general market (where commodities are being traded) and specialized market (where only a single commodity is being trades). For the participants of the financial markets the person has to meet certain criteria, which can be based on a number of factors like the amount of money held, the investor’s geographical location, and the market knowledge or the profession and interest of the participant.

Every nation in the world, have its own financial market. Some are very small, with few participants while some are giants with huge number of participants like NYSE.

Financial sector is being breakdown into a number of markets:

a) Capital Markets: A market in which individuals and institutions trade financial securities. In this kind of market, the organisations and institutions in both the public and private sectors often sell securities on the capital markets in order to raise funds. It consists of :

• Stock Market: This kind of markets allows investors to buy and sell shares in publicly traded companies. Also known as Equity market. It can be split into two main sections: the Primary market and the Secondary market.
• Bond Market: A bond is a debt investment in which an investor loans money to an entity, (government or corporate), which borrows the funds for a defined period of time at a fixed rate.

b) Commodity Market: A market which facilitates the trading of commodities.

c) Money Market: Market in which the financial instruments with high liquidity and short term maturity is being traded.

d) Derivatives Market: Market which provides the instruments for the management of financial risks.

e) Foreign Exchange Markets: Markets which facilitates with the trading of foreign exchange.

Finally, the Financial Markets is the market for the exchange of capital and credit,which includes the money markets and the capital markets.Financial Markets attract funds from the investors and channel them to corporations –they thus allow organizations to finance their operations and achieve growth.