The financial market is crucial for resource allocation, sustaining liquidity, and lowering transaction costs. It serves as a conduit for connecting lenders and borrowers of funds.
Financial market is a market where creation , Introduction, Exchange/trading of long term and short term financial instruments takes place.
The main participants in a financial market are:
- Individual sectors
- Financial institutions
- Banks
- Government
- Cooperatives
- Mutual friends and etc.
Below are the Features of financial markets:
1. Link
It solves a link between investors and borrowers by providing a regular and open system, In this way it reduces the gap between these two mutual benefits. Financial market allows the buying and selling of both marketable securities
2. Government rules and regulations
The government controls the operation and Attributes of financial market by imposing certain rules and regulations which they need to follow strictly.
3. Long term and short term investment
Financial market deals in both short term & long term insecurities so investors can invest their money as to their risk Eligibility. Accessibility of information. Financial market allows investors to get Quick and easy Access to the information to secure transaction for transparency.
The financial market is an active marketplace where securities can be easily and often bought and traded. It could be a real place or it might not.
Below are the main functions of fund in a financial market:
- Domination of price
- Provide liquidity— liquidity of trade Access
- Reduction to transactional lost.
- Fund mobilization
- Reflect economic and business condition
- Capital formation.
Financial market is however classified as listed below:
1.Nature of Chain — divided into two market
Debt market: is a place where buying and selling of debt instrument between debt investors
Equity market: is a market of equity instruments.
2. Money market is a market where monetary Assets are sold
Capital market: is a market for long time investment that have died turning reclaim into Capital. It is divided into two.
Primary market: is for new security also known as new issues market known as security introduced for the first time.
Secondary market: provides an Avenue to the investors to trade an already issued security. It Is also called After market.
3. Time of delivery- divided in to two
Cash market: cash market market is where transaction between buyers are settled in real time.
Future market: it is where settlement of transaction takes place at the future specified date.
4. Organization structure dived into two.
Exchange trade market: Exchange trade market or financial market which is regulated by a centralized organization with a standard procedure.
Over the counter market: The over-the-counter market is a deal-oriented marketplace for securities that is respectable and well-organized, and where trading can be done over the phone, by email, etc.