The questions related to financial market are often asked by people. Students need to know about the functions and types of different markets for their studies and research works. The term “Financial Market†is used in a broad sense though it has many types and difference in activities. We can be assured that civilisation had stood on economy and it still is. To build up our society and development of the human race, the principles and strategies of an economy are very important. The growth of the production made by a nation is directly related to the development of the nation.
A financial market is a place where people make deals in securities, commodities, insurance and fix the prices of services and products. The prices of all the products and services fluctuate on the basis of the supply and demand of the products. Positively the market means a place where all the transactions of goods and services are made between the consumers and sellers.
The transactions include agricultural goods, costly metals all, electronic products, real estate, automobile goods and many other services. In the ancient times, people used to buy products in exchange of products only and this was commonly known as so-called barter system.
But with the development of society and civilisation, people have invented new ways and policies in the economy. One can say that development lies in the many stages of production and supply. To get more information you can take help from Financial Market homework answers.
Different types of financial market
There are many types Financial Market in the Economics. All these sectors have different roles in raising capital and financial investments in agriculture, manufacturing, small and heavy industries. From Financial Market homework answers, I am giving some ideas about different types of financial markets.
- Capital market
The capital market is a term used in the sectors where the short term or long term debt and equities are exchanged. Financial sectors like Bank of England or the US Securities and Exchange Commission monitors the market to protect the investors and flow of capitals.
- Stock market
The stock market is also called as share market. Here the correspondence of buyers and sellers exists. This market offers investments through the mode of shares, stocks, and equity crowdfunding in trading.
- Bond market
It also enlisted and worked as a financial market. If any company or individual wants to issue or sell the debt securities, they have to do these in the form of bonds. For public and private expenditures the bond market provides long-term investments.
- Money market
It is commonly known as the short-term credit market. Short-term borrowing and lending of money are done as money becomes a commodity. It provides liquidity for the international financial sectors. The money market includes bankers’ acceptances, bills, documents of exchanges, agreements of repurchases, short-term mortgages, and some other securities.
The money market has taken a great role in investing domestic and global businesses. It helps the industries by providing loans to complete their projects. As it depends on the circumstances of the money market itself, the short-term interests influence the long-term rates. The money market allows the commercial banks and mutual funds to invest their capitals in different trades. If you are interested, you may find more ideas from Financial Market homework answers.
- Commodity market
This market is assumed to be the oldest market system in the world as the Sumerians introduced it. In those days, clay made and later metal coins were used and money. As days passed to form civilised nations, we simplified the policies and developed the standard of businesses.
In Europe, since the late tenth-century money market began to include mechanism of transport, labour. Land and capital. Financial Market homework answers are telling you that we may know about the primary goods such as agricultural goods like rice, wheat, tea, coffee, and sugar.
In a word, the goods that do not come from manufacturing. These products are known as soft commodities, and hard commodities are gold, coal, and oil. In the commodity market, all the trades related to these commodities are made. In all over the world financial transactions are made accessing over fifty commodity markets.
- Foreign exchange market
The foreign exchange market is an international market which makes a trade on currencies and that is why it also know as currency market. All kind of purchase and selling of currencies at their current prices is made. If we judge the market by its volume, it may be the biggest market in the world.
The famous international banks are associated, and they are the main part takers in this market. In all around the world, the financial centres are functioning as the monitors of this trades and help a wide range of sellers and buyers. The foreign exchange market evaluates the relative value of a currency by its market price in respect of another currency. The Forex functions through several financial institutions and works on several levels. It also helps the trading organisations and global investors by understanding the conversations between different currencies.
Suppose, a company wants to export its goods or buy raw materials to or from another country. Foreign exchange market helps the company to exchange the currency by evaluating the currency of that particular country. Financial Market homework answers will help you to know more
- Banking
Banking is an important part of the financial market which must have a license to participate in different trades and securities. By proving the opportunity loan and deposits banking institutions works as a financial market. Several services like wealth management, exchange of currency, secured deposits, and other mortgages banks play a vital role.
To monitor the banks in every country, there are central banks or the national governments. Issuing money and offering the opportunities of cheque payments bank works and make the economy sustainable.
In modern days with the rise of technology, we get many facilities from banks like internet banking, mobile banking and money transfers. All kind of payments can be made through its different processes.
Correspondence between lenders and borrowers
From Financial Market homework answers it can be simply seen that in the financial market, lenders and borrowers are the main participants. Most of us do not realise that almost everybody is a lender. We lend money when going to deposit their money in banks, insurance companies, make a plan of constructing any project.
We also lend money as an investment in several government bonds. Companies also make offers to lend money when they have surplus cash, and they are not willing to invest it in short. Borrowers take money in several forms like mutual funds and other organisations. This is how the raising of fund or capital goes on.