What is Financial Market?
Financial Market refers to the marketplace where the activities related to the creation and trading of the different financial assets such as bonds, shares, commodities, currencies, derivatives etc takes place.
It provides the platform to sellers and buyers of the financial assets to meet and trade with each other at a price as determined by market forces.
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Financial Market refers to the marketplace where the activities related to the creation and trading of the different financial assets such as bonds, shares, commodities, currencies, derivatives etc takes place.
It provides the platform to sellers and buyers of the financial assets to meet and trade with each other at a price as determined by market forces.
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Types of Financial Markets
Mostly there are 6 types of Financial markets.
1 – Money Market
2 – Capital Market
3 – Derivatives Market
4 – Commodity Market
5 – Foreign Exchange Market
6 – Spot Market
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Mostly there are 6 types of Financial markets.
1 – Money Market
2 – Capital Market
3 – Derivatives Market
4 – Commodity Market
5 – Foreign Exchange Market
6 – Spot Market
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What is Money Market?
Money Market is a type of financial market for lending or borrowing short term loans with a maturity of less than 1 year. The players are usually corporates, banks and financial institutions as a huge amount of money is involved. The instruments dealt in the money market are Treasury Bills, Commercial Papers, Certificate of Deposit, Bills of exchange, etc.
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Money Market is a type of financial market for lending or borrowing short term loans with a maturity of less than 1 year. The players are usually corporates, banks and financial institutions as a huge amount of money is involved. The instruments dealt in the money market are Treasury Bills, Commercial Papers, Certificate of Deposit, Bills of exchange, etc.
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What is Capital Market?
Capital Market is a type of financial market for the trading of stocks (shares) and bonds. This market is used for lending or borrowing money for the long term.
Capital markets are further split into the primary and secondary markets.
The companies issue shares in the form of equity or preference shares or fixed interest-bearing bonds in the primary market. Once the shares are issued, the investors subscribe to them at a lower price and later sell them to another investor at a higher price to earn profit in the secondary market.
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Capital Market is a type of financial market for the trading of stocks (shares) and bonds. This market is used for lending or borrowing money for the long term.
Capital markets are further split into the primary and secondary markets.
The companies issue shares in the form of equity or preference shares or fixed interest-bearing bonds in the primary market. Once the shares are issued, the investors subscribe to them at a lower price and later sell them to another investor at a higher price to earn profit in the secondary market.
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What is Derivatives Market?
Derivatives Market is a type of financial market which deals with trading of Futures, Options, Forward contracts and swaps. They can be dealt with either over the counter or in exchange-traded derivatives. Derivatives derive their value from the underlying asset and are used to manage financial risk due to a change in price.
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Derivatives Market is a type of financial market which deals with trading of Futures, Options, Forward contracts and swaps. They can be dealt with either over the counter or in exchange-traded derivatives. Derivatives derive their value from the underlying asset and are used to manage financial risk due to a change in price.
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What is Commodity Market?
The commodity market is a physical or a virtual market place where market participants meet and buy or sell positions on commodity products like oil, gold, copper, silver, wheat, barley.
Though started with Agri commodities initially, commodity markets today trade in all types of commodities like base metals – gold, silver, copper, infrastructure like oil, electricity, and even weather forecasts.
There are about 50 major commodity exchanges worldwide which trade in more than 100 commodities.
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The commodity market is a physical or a virtual market place where market participants meet and buy or sell positions on commodity products like oil, gold, copper, silver, wheat, barley.
Though started with Agri commodities initially, commodity markets today trade in all types of commodities like base metals – gold, silver, copper, infrastructure like oil, electricity, and even weather forecasts.
There are about 50 major commodity exchanges worldwide which trade in more than 100 commodities.
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What is Foreign Exchange Market?
The foreign exchange market, also known as forex, FX, or the currencies market is an over the counter (OTC) global marketplace that determines the exchange rate for currencies around the world. Participants in these markets can buy, sell, exchange, and speculate on the relative exchange rates of various currency pairs.
Foreign exchange markets are made up of banks, forex dealers, commercial companies, central banks, investment management firms, hedge funds, retail forex dealers, and investors.
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The foreign exchange market, also known as forex, FX, or the currencies market is an over the counter (OTC) global marketplace that determines the exchange rate for currencies around the world. Participants in these markets can buy, sell, exchange, and speculate on the relative exchange rates of various currency pairs.
Foreign exchange markets are made up of banks, forex dealers, commercial companies, central banks, investment management firms, hedge funds, retail forex dealers, and investors.
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What is Spot Market?
The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date.
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The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date.
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What are Treasury Bills?
Treasury bills are money market instruments issued by the Government of India as a promissory note with guaranteed repayment at a later date. Funds collected through such tools are typically used to meet short term requirements of the government, hence, to reduce the overall fiscal deficit of a country.
Government treasury bills can be procured by individuals at a discount to the face value of the security and are redeemed at their nominal value, thereby allowing investors to pocket the difference.
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Treasury bills are money market instruments issued by the Government of India as a promissory note with guaranteed repayment at a later date. Funds collected through such tools are typically used to meet short term requirements of the government, hence, to reduce the overall fiscal deficit of a country.
Government treasury bills can be procured by individuals at a discount to the face value of the security and are redeemed at their nominal value, thereby allowing investors to pocket the difference.
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