business finance

Financial markets

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Introduction

A market is a place where willing buyers and willing sellers meet There are several markets capital markets which includes stock markets and bond markets , market for goods and services (commodities derivatives market consisting of future markets , insurance market and foreign exchange markets . The markets can be international or local with trading taking place at a given location e .g . NYSE , LSE or electronically e .g . NASDAQ . Capital markets can be further split into primary market

which is used to trade in newly issued securities and secondary market which is for trading already existing securities (Schenk , R (2008

One key feature about markets is that they are interrelated , i .e . they have some kind of connection . The effect of this is that a problem in one of the markets affects the other markets . A good example to illustrate this assertion is the financial market crisis in the USA . The credit crunch effects have been felt the world over (Schenk , R (2008

A financial market is a place where financial securities are traded Examples of these financial securities include shares , bonds debentures , unit trusts etc . The main function of the financial market is to allocate resources to the most production use . Financial markets also act as a medium through which changes in the economy are transmitted

Intermediaries

One of the important aspects of the financial markets is that of intermediation . A lot of investors do not enter the financial markets by themselves...