Understanding the Various Types of Financial Market: Overview
Financial Market A financial market is a market for the creation and exchange of financial assets. You participate in financial markets when you buy or sell financial assets. Functions: Price discovery Liquidity in financial assets, and Reduce the cost of transacting Classification of Financial Market Debt Market: The debt market is a financial market where participants can issue, buy, and sell debt securities, such as bonds and Debentures. Debt securities are essentially loans to the issuer, and the buyer of the security receives periodic interest payments in exchange for lending their money. For example, a government might issue bonds to fund its operations, and individual investors can purchase these bonds to receive periodic interest payments. Equity Market: The equity market is a financial market where participants can issue, buy, and sell ownership stakes in companies, known as stocks or shares. Investors in the equity market can benefit from capital appreciation due to growth in...