The term “financial market” refers to the area where securities and financial assets are bought and sold.  In the economy of the country, it distributes scarce resources. It facilitates capital mobilization between investors and collectors, acting as an intermediary between them.
The primary stock market is where new stocks are originally offered, and the secondary market is where stock securities trading takes place in a financial market. The stock market permits investors to buy and exchange shares of publicly traded firms.

Financial Markets’ Significance in an Economy

The markets facilitate the trading of financial holdings between buyers and sellers.
Kinds of financial market are the stock market or foreign currency trading.  The buying and selling of various financial assets, such as stocks, bonds, currencies, and derivatives, creates the financial markets.  Because of macroeconomic variables like taxes, the market values of securities may not be indicative of their actual value.

The Financial Markets’ Function

An essential function of financial markets in our economy is to minimize price shocks while facilitating seamless, uninterrupted global trade. Learn all there is to know about the financial markets.

Categories of Financial Markets

OTC Market: They oversee the public exchange for stock that isn’t listed on the New York Stock Exchange, NASDAQ, or American Stock Exchange. Businesses that are typically tiny, easily traded, and subject to less regulation are dealt with via the OTC market.

Bond Market: Funds are loaned by investors on bonds as securities for a predetermined duration at a predetermined interest rate on a bond market. Worldwide, federal, state, local, and corporate governments all issue bonds.

The money markets are where securities that mature in less than a year are loaned and traded with substantial liquidity and short maturities.

The derivatives market is where traders trade securities that are based on their main asset’s value.
The primary item in the derivatives market, such as futures, choices, contracts-for-difference, forward contracts, and swaps, has a market price that determines the derivative contract value.
The foreign currency trading market is an online financial marketplace where investors exchange currencies. This financial market is a great deal of liquid in the world.

Financial Market Functions

• The following list includes the crucial roles that the financial market plays.
• By exchanging savings in the most profitable ways, it mobilizes them.
• Through interactions between investors and market supply and demand, it helps determine the price of assets.
• It provides bartered assets with liquidity.
• Less expensive and time-consuming since parties don’t have to invest additional time and resources in locating possible customers to handle securities.
• By providing useful information on the securities exchanged in the financial market, it also lowers costs.