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1. Financial markets and its types and functions f
A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities. kkkkkkkkkkkkkk
Entities that issue financial instruments do so for one fundamental reason and that is to raise capital. If you take a look at a company’s annual report and accounts, you will notice on the Balance Sheet that the company has assets that are matched by liabilities. Assets are what the company owns and liabilities reflect the ways that the assets have been financed. Depending on the individual circumstances, a company can finance its assets by issuing securities (equity, bonds, etc.), borrowing cash or a combination of both. A “soft” benefit of issuing securities is that the issuer gains a presence in a particular market; there is a certain cachet for a company that has its shares listed on a major stock market, such as Tokyo, New York or London. One of the features of equity and bonds is that these are negotiable and the investor community is free to buy and sell these instruments under rules and regulations laid down in the markets where the instruments are issued. We refer to this as a secondary market. Investing is an inherently risky business. The market price might move away from the investor, resulting in a loss if the investor decides to sell the asset. It is also risky in the sense that the issuer might default, leaving the investor with a worthless asset, and risky in the sense that the benefits of ownership may either not be received or not be as high as expected. By contrast, derivative financial instruments are issued by the market rather than the issuer of the underlying asset from which the derivative derives its value. The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, for instance, a stock exchange or commodity exchange. This may be a physical location (such as the New York Stock Exchange (NYSE), London Stock Exchange (LSE), JSE Limited (JSE), Bombay Stock Exchange (BSE) or an electronic system such as NASDAQ. Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell the stock from the one to the other without using an exchange.
Capital markets consist of: ddddddddddddddddddddddddddddddddddd
Stock markets, It is a place where shares of pubic listed companies are traded. The primary market is where companies float shares to the general public in an initial public offering (IPO) to raise capital. ssssssssssssssssssssssssssssssssssssssssssss
Bond markets, is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on for public and private expenditures. sssssssssssssssssssssssssssssssssssssss
Commodity markets, The commodity market is a market that trades in the primary economic sector rather than manufactured products, Soft commodities is a term generally referred as to commodities that are grown, rather than mined such as crops (corn, wheat, soybean, fruit and vegetable), livestock, cocoa, coffee and sugar and Hard commodities is a term generally referred as to commodities that are mined such as gold, gemstones and other metals and generally drilled such as oil and gas.
Money markets, which provide short term debt financing and investment.
Derivatives markets, which provide instruments for the management of financial risk. дддддддддддддддддддддддддддддддддддддддддддддддд
Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market. dddddddddddddddddddddddddd
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