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Finance & Accounting
Pages 5 (1255 words)
Introduction This is the market where financial instruments, which includes shares, foreign currency, bonds, futures, options, derivatives contracts and other asset-backed securities are, traded (Levinson 2010). Financial markets act like a platform whereby funds are moved from those who have funds (investors) to those who needs the funds (borrowers) (Madura2010)…
The parties involved in the financial markets include investors, financial institutions (intermediary) and other parties that are brought together by formal trading rules and communication networks for business different financial instruments (assets and credits)(Brigham&Ehrhardt2010). Difference types of financial markets Financial market are classified depending on the types of securities that is traded, time to maturity, types of participants and types of transaction(Besley 2011, p.83). Different types of financial markets are as follows: Capital markets This market deals with medium and long- term funds. This is made up by all the long-term borrowings from banks and financial institutions, borrowings from foreign markets and rising of capital through capital market, through issuance of securities. This market is classified into two; primary market and secondary markets. Primary market comprises of obligations that comprises of long-term funds by companies by making issuance of shares and debentures for the first time. This is normally during the first stage when the companies are rolling into business for the first time. A secondary market is also referred to a stock exchange. It represent the day today dealing in the stock exchange. ...
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