HELLO
READERS,
Hope you all
are doing great. Today, I covered a topic regarding Financial Market.
When I say
Financial Market, I mean a market in which people trade (buy or sell) the
Financial securities (or financial assets).
Financial
Securities?? What does that mean? … Let find out!
Financial
Securities are the shares (or stocks) or bonds or any instrument in which
people are expected return on their invested amount.
So,
financial securities are traded in the financial markets.
Now,
Financial market can be divided broadly into 2 categories:
1. MONEY MARKET
The Money Market deals in the demand and supply of short term funds, with
the maturity of 1 year or less than 1 year. Mostly traded in the marketable
securities like Treasury Bills and Commercial Papers.
There are several other
money market instruments, including certificate of deposit, bills of exchange,
treasury bills.
Such securities are of high liquidity and low risk nature.
Liquidity=high
Risk=low
2. CAPITAL MARKET
The Capital Markets are the markets in which the long-term debt (Bonds)
and the equity (shares) are bought and sold.
The financial instruments in both equity and debt are issued and traded
in this market.
Further, Capital market can be categorised into two segments i.e.,
primary market and secondary market.
Now, let us understand each one of them.
i. Primary Market
It is a market where
securities are offered to the public for the first time. In this market, a
borrower offers new securities in
exchange for cash from the investors. Treasury Bills, stocks
etc. are all such financial securities whose sale take place in the primary
market. Such securities are being issued by the Companies and the Government with
the purpose to receive cash from people who buy such financial securities.
When such fresh securities are being sold for the first time, it is termed as Initial Public Offer (IPO).
When such fresh securities are being sold for the first time, it is termed as Initial Public Offer (IPO).
ii. Secondary Market
Secondary market is the
place where buying and selling of existing
securities take place. Here, the securities may trade repeatedly. It is also termed as
aftermarket and follow on public
offering. Basically, in this market
the securities are being transferred from one investor to another.
Financial
Markets can also be divided into Organised Exchange Market and Over the Counter
(OTC) Market.
Now, let’s
understand the aspect regarding the organized exchange market and OTC Market.
Ø Organized Exchange Markets
In such type of markets, there is a regulatory body which carry out the
transactions. These markets basically have a specific physical location where
the trading activity takes place like Bombay Stock Exchange (BSE), National
Stock Exchange (NSE).
Ø Over the counter (OTC) Markets
In such type of markets, there is no regulatory body which carry out the
transactions. These markets do not have physical location, instead they are
categorised by the networks of dealers connected by the mobile phones or
computer networks. The example of such market is Over the Counter Exchange of
India (OTCEI).
So, this is
all about the concept of financial markets and its categories.
Thank You
https://savingsvsinvestment.blogspot.com/2018/07/savings-vs-investment_9.html
Want to read about Relationship between Risk & Return? CLICK on the below mentioned link.
https://riskandreturnblog.blogspot.com/2018/07/relationship-between-risk-and-return.html
Want to read about Stock Exchanges? CLICK on the below mentioned link.
https://stockexchangesblog.blogspot.com/2018/07/stock-exchanges-bse-nse.html
Want to read about AI Effect? CLICK on the below mentioned link.
https://aieffect.blogspot.com/2018/07/ai-effect-on-financial-services.html
Want to read about CREDIT SCORE? CLICK on the below mentioned link.
https://creditscoreblog.blogspot.com/2018/07/credit-score-how-credit-score-is-calculated-is-credit-score-of-700-good.html
Want to read about Stock Exchanges? CLICK on the below mentioned link.
https://stockexchangesblog.blogspot.com/2018/07/stock-exchanges-bse-nse.html
Want to read about AI Effect? CLICK on the below mentioned link.
https://aieffect.blogspot.com/2018/07/ai-effect-on-financial-services.html
Want to read about CREDIT SCORE? CLICK on the below mentioned link.
https://creditscoreblog.blogspot.com/2018/07/credit-score-how-credit-score-is-calculated-is-credit-score-of-700-good.html
Want to read about BITCOIN: How cryptocurrency work? CLICK on the below mentioned link.
https://howcryptocurrencywork.blogspot.com/2018/07/bitcoin-how-cryptocurrency-work-how-bitcoin-work-bitcoin-value-are-bitcoins-safe-are-bitcoins-illegal.html
Want to read about Portfolio Management? CLICK on the below mentioned link.
https://portfoliomanagementblog.blogspot.com/2018/07/portfolio-management-process-why-do-portfolio-management.html
Want to read about Where to Invest Money In 2018? CLICK on the below mentioned link.
https://wheretoinvestmoneyin2018.blogspot.com/2018/08/where-to-invest-money-in-2018-where-to-invest-money-wisely.html
Want to read about Trading Process in stock market? CLICK on the below mentioned link.
https://tradingprocessinstockmarket.blogspot.com/2018/08/trading-process-in-stock-market-how-to-do-trading-in-stock-market-how-to-do-trading-in-stock-market-in-india.html
Want to read about How to Invest in Mutual Fund? CLICK on the below mentioned link.
https://howtoinvestinmutualfundblog.blogspot.com/2018/08/how-to-invest-in-mutual-fund.html
https://wheretoinvestmoneyin2018.blogspot.com/2018/08/where-to-invest-money-in-2018-where-to-invest-money-wisely.html
Want to read about Trading Process in stock market? CLICK on the below mentioned link.
https://tradingprocessinstockmarket.blogspot.com/2018/08/trading-process-in-stock-market-how-to-do-trading-in-stock-market-how-to-do-trading-in-stock-market-in-india.html
Want to read about How to Invest in Mutual Fund? CLICK on the below mentioned link.
https://howtoinvestinmutualfundblog.blogspot.com/2018/08/how-to-invest-in-mutual-fund.html