How Does Financial Markets Affect The Financial Market
explanatory Essay
1571 words
In this paper I would discuss about the financial market and it 's many types and discuss how it affects the financial market, but before we can discuss about the market we must first know what the financial market is first. The financial market is a market where people of the same or different nationality would trade financial securities and other fungible items of value at slightly lower transaction costs and at prices that are at equal with the supply and demand at that time. For the people who may or may not know security are a tradable asset which are stocks and bonds while commodity are items that help satisfy the needs and wants of people commodity in the financial market includes precious metals and agricultural products. In an economics …show more content…
In this essay, the author
- Describes the financial market as a market where people of the same or different nationality would trade financial securities and other fungible items of value at slightly lower transaction costs and at prices that are at equal with the supply and demand.
- Explains that the capital market is where a person or an institution would trade financial securities. the stock market allows investors to buy and sell shares in trade companies.
- Explains that the bond market is a debt investment where investors are given the choice to lend money to companies and governments to help finance project bonds.
- Explains that the cash market is complex and delicate since it can be easily dominated by corporate investors and limited partnerships. the interbank market and the forex market are two of the world's most powerful markets.
- Explains the primary and secondary markets and its many uses to the financial market. the primary market is the market where new securities are issued in the exchange.
Financial markets also has a different use which would be get the attention of potential investors in the hopes of attracting funds which would then allow other corporations achieve financial growth while at the same time attract new customers but many people would ask why would we need a financial market to begin with and would ask would it not be easier to do trade without this market the answer is simple without the market the chance of doing business would be dangerously low the reason for this would be without the market borrowers will have a hard time finding people or companies that are willing to lend money to them which lead to these borrowers going to the bank asking for lend and mortgages which would could be bad for the economy the reason for my reasoning would be that if the borrowers does make money everything would be fine but if the borrowers lost the money and has no money to pay back the bank it would lead to a financial disaster which would ruin the economy which is why the market is need to reduce the chance of a financial …show more content…
Treasury bills, commercial paper, municipal notes, Eurodollars, federal funds and repurchase agreements money market investments are sometimes called cash investment since they have a short maturity date and rate. The money market is also considered safe since the items in this market is highly liquid in nature and also has a short maturity which must their investors feel safe from any bad investments unfortunately there are still risks in the market, which would be the threat of default on securities on commercial papers which is a problem to the investors in the money market. The next market, we would discuss would be the spot market, which is somewhat different from the other markets I have mentioned the reason for this would be that in this market there are greater chances of both gaining and losing profit. In this market both goods are only sold and cash and delivered immediately, which means contracts that are sold or bought are immediately
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- Explains that the u.s. financial markets play a big role in the economy. if no one is investing in businesses, they cannot start up, or grow larger.
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