Financial Market are you confused with this term, Then you don't 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 type of financial transaction that help you business grow and make profit for you is financial market , that is in simple terms.
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In brief Financial market is a place where two people are involved in transaction of goods and services in exchange of moneyThe two people involved are:
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 Markets.:-
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-
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 what's really going on
2. Bond Markets -Most of the times when stock prices moves up, bond prices moves down. However, there are many different types of bonds including Treasury Bonds corporate bonds, and municipal bonds. Bonds also provide some of the liquidity that keeps the economy functioning smoothly.
It's 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 the value 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.
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 that's why commodity returns do better in inflationary times, while stocks and bonds perform the returns on stocks in companies that produced the same commodities.
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, credit instruments and the institutions:
a. Maturity Period
b. Credit Instruments
c. Nature of Credit Instruments
5. Derivative Markets
The Derivatives Market is meant as the market where exchange of derivatives takes place. Derivatives are one type of securities whose price is derived from the underlying assets. And value of these derivatives is determined by the fluctuations in the underlying assets. These underlying assets are most commonly stocks, bonds, currencies, interest rates, commodities and market indices. As Derivatives are merely contracts between two or more parties, anything like weather data or amount of rain can be used as underlying assets. The Derivatives can be classified as Future Contracts, Forward Contracts, Options, Swaps and Credit Derivatives.
You might be interested reading Stock market terms / terminology.
6. Future Markets
Future market is a type of financial markets which deals with the trading of financial instruments at a specific rate where in the delivery takes place in future.
7. Insurance Markets
Insurance market is simply the "buying and selling of insurance." Consumers or groups buy insurance for risk management from insurers offering coverage for specific risks.Individual consumers purchase insurance coverage to protect against risk. Common insurance market products including homeowner's, auto, life and health insurance. Monthly premiums are paid to the insurer in exchange for a commitment of coverage according to the policy.
market as it is often called is the market in which
currencies are traded. Currency Trading is the world’s
largest market consisting of almost trillion in daily volume
and as investors learn more and become more interested, the
market continues to rapidly grow. Not only is the forex
market the largest market in the world, but it is also the
most liquid, differentiating it from the other markets. In
addition, there is no central marketplace for the exchange
of currency, but instead the trading is conducted
over-the-counter. Unlike the stock market, this
decentralization of the market allows traders to choose from
a number of different dealers to make trades with and allows
for comparison of prices. Typically, the larger a dealer is
the better access they have to pricing at the largest banks
in the world, and are able to pass that on to their clients.
The spot currency market is open twenty-four hours a day,
five days a week, with currencies being traded around the
world in all of the major financial centre.
8. Foreign Exchange Markets
Private market is a form of market where transaction of financial products takes place between two parties directly.
10. Mortgage Market
In most countries, a mortgage is the primary way that prospective homeowners have of buying a house, flat or land on which to build a property, collectively called real estate. This type of mortgage is called a residential mortgage or home loan. They are most often taken up by individuals or couples. The payment is made to the individual concerned on submitting certain necessary documents and fulfilling certain basic criteria.