What Is Financial Market?
Essay Preview: What Is Financial Market?
Report this essay
What Is Financial Market?
Financial Market are you confused with this term, Then you dont need to, As financial market go by many terms including capital market, wall street , dalal street , even the markets, some people simply say its a stock market, but they actually referring to , stock, shares, bonds and commodity.

It is quite simple ay type of financial transaction that help you business grow and make profit for you is financial market , that is in simple terms.
In brief Financial market is a place where two people are involved in transaction of goods and services in exchange of money
The two people involved are:
Buyer
Seller
In a market the buyer and seller comes on a common platform, where buyer buys goods and services from the seller in exchange of money.
Let us show you what are various kind of Financial Market.:-
Stocks And Shares Investing
A place where people invest money for a longer term i.e. more than one year is called as capital market. In a capital market various financial institutions takes money from individuals and invest in capital market for long term

Capital market further expand in to two:-.
1. Primary Market-
Primary Market is a form of capital market where companies issue new stock, shares and bonds to investors in the form of IPO’s (Initial Public Offering). Primary Market is a form of market where stocks and securities are issued for the first time by organizations.

2.Secondary Market-
Secondary market is a form of capital market where stocks and securities which have been previously issued are bought and sold.
Types Of Capital Market
1.Stocks Markets-
Stock Market is a type of Capital market which deals with the issuance and trading of shares and stocks at a certain price. Most people understand that a stock market is a place where shares are bought and sold, and in essence this is true. Most people understand a stock market is dominated by traders who speculate on the price of shares to make a profit on the difference between the buying and selling price, and in essence this is true. But a stock is so much more in-depth than these two basic propositions would suggest, and requires some deeper analysis to get to the bottom of whats really going on

2.Bond Markets-
Most of the times when stock prices moves up, bond prices moves down. However, there are many differenttypes of bonds including Treasury Bonds corporate bonds, and municipal bonds. Bonds also provide some of the liquidity that keeps the economy functioning smoothly.

Its important to understand the relationship between Treasury bonds and Treasury bond yields. Basically, when Treasury bond values go down, the yields go up to compensate. When Treasury yields rise, so do mortgage interest rates. Even worse, when Treasury values decline, so does thevalue of the dollar. This makes import prices rise, which can trigger inflation. Treasury yields can also predict the future — an inverted yield curve usually heralds a recession.

3. Commodity Markets-
Commodities are goods that are typically used as inputs in the production of other goods and services. Commodity prices are determined largely by supply and demand interactions in the global marketplace. Supply and demand conditions may be influenced by factors like the weather, geo-political events, and supply-side shocks (e.g., wars, hurricanes). Some examples of commonly traded commodities are energy products like oil and natural gas, metals like gold, copper and nickel, and agricultural products like sugar, coffee, and soybean. Commodities exhibit interesting risk-return profile. Commodities not only offer a good way to diversify a portfolio of stocks and bonds, they often offer better returns. According to a Yale Study, Since 1959, commodities futures have produced better annual returns than stocks returns and outperformed bond returns even more During the 1970s, commodities futures outperformed stocks; during the 1980s the exact opposite was true – evidence of the “negative correlation” between stocks and commodities that many of us have noticed.

The returns on commodities futures “positively correlate” with inflation. Higher commodity prices were leading a wave of high prices in general (i.e., inflation), and thats why commodity returns do better in inflationary times, while stocks and bonds perform the returns on stocks in companies that produced the same commodities.

4. Money Markets-
Money market involves individuals who deal with the lending and borrowing of money for a short time frame. Money market is distinguished from capital market on the basis of the maturity period,

Get Your Essay

Cite this page

Financial Market And Stock Market. (June 14, 2021). Retrieved from https://www.freeessays.education/financial-market-and-stock-market-essay/