subject: Varying Types Of Financial Markets That You Should Be Aware Of [print this page] There are a number of varying types of financial markets. These are markets basically used as means to meet an end when it comes to individual and corporate funding needs. Financial markets are a way in which investors and borrowers can meet and trade securities. Individuals and company investors typically sell stocks and bonds in exchange for funding from lenders that will end up receiving a form of interest payments for their investments. There are risks associated with the finance market and it is best to know as much as you can about finance markets before delving into trading securities.
There are many different ways money is made and lost on the stock market. Stocks are basically shares of ownership for a company and are typically sold to raise capital, which is another reason why the financial market can be referred to as a capital market. The investors that purchase these shares, stand to make a profit when the companies increase their earnings and worth in the financial markets.
Other vital markets include money markets. Money markets are components of the financial markets. This type of market concerns itself with short-term borrowing and lending practices of securities with a maturation date of one year or less. Various instruments are traded in money markets such as treasury bills, commercial paper, certificates of deposit and several other financial instruments. Money markets essentially facilitate short term debt and capital financing.
There are many other types of financial markets such as; derivatives, foreign exchange, insurance and commodity markets. The purpose of all financial markets is to provide some form of fund raising. It is through these various financial markets that those in need of borrowing funds can find those that are willing to lend funds. These types of financial transaction take place in stock exchange. It is in stock exchange where investors can buy and sell shares of stock from other companies.
Many different types of transactions occur in the stock market. It is a very frenetic environment where deals big and small are made everyday. There are a number of different external factors that directly affect what happens in the stock market. It is a very volatile, financial market place. Many investors have found great wealth in the transactions they engaged themselves with in this arena.
There are several governing institutions that look over the transactions that take place in the stock exchange. The Securities and Exchange Commission makes sure all lenders and borrowers are acting within the regulated guidelines and policies. Any infractions will be punished, either by having to pay a hefty fine or more punitive measures that may include jail time.
If you are interested in investing, it would be wise to understand the different types of finance markets. The main purpose of these markets is to raise capital. A company may sell shares of its stock for the purpose of generating new capital to expand its operations. An individual may liquidate some of their shares in order to have enough money to put down on a new home. There are a number of reasons why certain financial transactions take place in the financial market.
