You need to know that a financial market is any marketplace in which trading of derivatives and securities like equities occur. You need to know that financial markets vary in size. You should find out a list of stock markets. Financial markets exchanges can also over online. You can purchase and sell securities of publicly traded companies in financial markets. Primary markets are financial markets where shares are offered for the first time. The secondary market is where trading of stocks that are not new takes place. The demand and supply of financial assets is determined by the forces of supply and demand in the financial market.
It is good for you to know that the financial market plays an important role in the economy of a nation. You need to understand that the financial market is a vital way to ensure that people can share scarce financial resources in the country. As an investors or a saver, the financial market is the best place to mobilize funds. The saving that are mobilized are used productively by investors. The liquidity of financial assets is facilitated by the financial market.
You need to understand that financial markets vary in a number of ways. One type of financial markets is the over the counter market. If your company is not publicly traded on ASE, NYSE, or NASDAQ, you are supposed to publicly trade on over the counter financial markets. You should be aware of the fact that companies that are not big in size are the ones that publicly exchange their financial securities and derivatives on over the counter financial markets. It is also essential for you to know that there is minimal financial regulation on over the counter financial markets.
Another type of financial markets is the financial market for bonds. In the bond financial market, investors are the ones that loan people money and then the borrower returns after a defined period with interest. You need to understand that municipalities can issue bonds as well.
You need to know that money markets are examples of financial markets. Highly liquid financial assets, for example, certificates of deposit, and commercial paper, are traded on money markets.
The derivatives market is also an example of a financial market. Securities that derive their value from their underlying assets are traded in derivative markets.
Forex markets are also considered to be financial markets. Cash from different countries is traded on the forex market. This is the most liquid financial market. Currencies from different countries carry different values on the money market.