TERMINOLOGY: Financial Markets (Where it will be traded?)
Financial Markets, just like its name suggests, is a form of marketplace that offers a channel
or a system for the selling and purchase of assets including bonds, equities, foreign exchange, and
derivatives. They go by a variety of titles, such as "Wall Street" and "capital market," but all of
them refer to the same thing. Simply put, corporations and investors can raise money on the
financial markets for business expansion or to increase their own wealth, respectively.
Additionally, it also helps distribute limited resources in the economy of the country.
Financial markets efficiently distribute savings and investments into the economy and
support the expansion of capital for the production of goods and services. The markets offer an
open and transparent mechanism to determine pricing for everything exchanged because they are
open to the public. They include all information that is currently known about everything traded,
which lowers the cost of learning new information.
Liquidity is provided by the size of the financial markets. Consequently, sellers may sell
their assets whenever they need to raise money. Additionally, the size lowers operating expenses.
Companies don't have to look very far to find a buyer or a seller. There are also two types of
Financial Markets, the money market and capital markets. Money markets is for cash instruments,
whereas Capital markets trades derivative financial instruments. Other markets are Commodities
market, and Stock market.
Money does not grow in trees, but they surely will in a financial market.
References:
Corporate Finance Institute. (2022, November 26). Financial Markets.
https://corporatefinanceinstitute.com/resources/wealth-management/financial-markets/
Make Financial Markets Work for You. (2022a, January 27). The Balance.
https://www.thebalancemoney.com/an-introduction-to-the-financial-markets-3306233
Make Financial Markets Work for You. (2022b, January 27). The Balance.
https://www.thebalancemoney.com/an-introduction-to-the-financial-markets-3306233