Skip to main content

Types And Functions Of Financial Markets

A financial market is a platform where people trade in all kinds of equities. They involve shares, bonds and currencies. There are usually many different external forces that determine the pricing of these equities in the respective market. There are different kinds of markets including:

• Capital markets
• Money markets
• Third and fourth markets
• Over the counter markets
• Forex market
• Derivative markets
• Cash or spot market

This article will look into some of the common markets from the list above.

Capital markets

This is the most common type of financial market present today. In this type of market, the public and private sector trades in various securities. Most companies also sell part of their shares in an attempt to raise capital. There are two types of capital markets. These are the stock market and the bond market. In the stock market, investors buy and sell shares of the companies listed at the bourse. It provides funds for the company while at the same time it gives the investor a chance to earn money by either, buying low and selling high, or earning through dividends.

Bond markets on the other hand are a bit different as they are loans that people can give to companies and even the government. This loan is then paid back with interest. With bonds, it does not matter whether the company will gain or lose money. They will have to pay back the bond either way.

Money markets

The money market is also getting famous very fast. It is a platform for lending and borrowing money then paying it back within a very short period of time. The money market involves things like the treasury bills, banker’s acceptance and even the municipal notes among other things.

Forex Markets

The Forex market on the other hand is a platform where currencies are traded. Different countries have different currencies and they all weigh different as compared to other currencies. This is actually the most liquid and largest financial market in the entire world. It is very busy and many people have made a lot of money in it. One benefit of this market is that it is open 24 hours a day 7 days a week. This is because different countries have different time zones, but, they all want to trade in the market.

Derivative markets

Derivative markets are known as one of the most complex markets in the list above. This is a contract that is drafted for the purpose of trading. People buy and sell these contracts depending on the price of the underlying share in the capital market. Derivative markets include the trading of options, futures and forwards. It is one market that is only dominated by the experts of trading.

Third and fourth markets

This market is not very common due to the fact that it does not involve individual investors. It is for large institutions and trades are between the broker and the dealer. This is because it deals with huge volumes of shares that individuals could not afford.

Cheryl Mourey is an investment adviser. She has been in the finance industry for more than a decade now. She got his inspiration from Kelly Ruggles.

Comments

Popular posts from this blog

4 Things You Need to Know Before Applying for Payday Loans

 Money keeps life worth living. This is because on certain occasions we are short of cash and our life becomes miserable. You have to pay for the refrigerator that broke down the night before. The repairman demands a down payment of $200 to put the focal point of your kitchen back into working order. This is where Payday Loans help you out. Get in touch with the Payday Locker to get the loan process started. Fact #1 People with a job will get a loan The payday loan is a short-term unsecured loan for employed people. We call it unsecured because they do not ask for any deposit or security to give you the loan. It is short-term because they will give the money within the day and the borrower will pay back the money within 15 days. And, it is a loan for people who have a job. If you don't have a job, they will not give you the loan. Fact #2 Payday Locker does not give a loan The payday locker is a service provider but they will not give you money. You will contact them to get the Cash

Apartment owners beware: building insurance stops at your apartment door

Buying a new apartment can be exciting, and with all the emotion and upheaval of moving into a new place, it can be easy to overlook (or even be unaware of) the need to make sure you’re properly insured. The problem is, this oversight is often not realised until it’s all too late. The sad fact is, many people don’t even realise they need their own insurance when buying into a condo or co-op, and assume that their building’s insurance covers everything. It doesn’t. That’s why it is important when you’re buying a new apartment, to know what is covered by the building owners’ insurance and what you need to get cover for personally. There is a checklist at Flex Insurance . Of course, you also need to know what kind of ownership you have over your unit, so let’s look at that first. Condo or Co-op - what difference does it make? Quite a big difference actually. Firstly, you don’t want to be under-insured. But at the same time, you don’t want to be paying twice for insurance cover

Advice On Cutting Down On Travel Costs

Next to rent or a mortgage, travel costs are likely to be the biggest outgoing for most working people. With fuel costs rocketing, pushing up the price at the pump and on public transport, the key question is how to make every penny count when it comes to travel. The best money-saving ideas aren’t rocket science, but often the simplest solutions are staring us in the face. So here are 5 quick tips to help you cut down on your travel costs.