- Books Name
- BUSINESS STUDIES-XII
- Publication
- ABCD CLASSES
- Course
- CBSE Class 12
- Subject
- Business Studies
FINANCIAL MARKET
Bring together borrowers and lenders together, for the creation and exchange of financial assets
In to the most productive investment opportunity
Classification of Financial Markets
- Capital markets
- Money markets
FUNCTIONS OF THE FINANCIAL MARKET
- Pricing of securities :
- The price of anything depends upon the demand and supply factors.
- Demand and supply of financial assets and securities in financial markets help in deciding the prices of various financial securities; where business firms represent the demand and the households represent the supply.
- Reduce the Cost of Transactions:
- By providing valuable information to buyers and sellers of financial assets, it helps to save time, effort, and money that would have been spent by them to find each other.
- Also, investors can buy/sell securities through brokers who charge a nominal commission for their services.
- This way financial market facilitates transactions at a very low cost.
- Add Liquidity to Financial Assets:
- Financial markets provide liquidity to financial instruments by providing a ready market for the sale and purchase of financial assets.
- Whenever the investors want, they can invest their savings into long term investments and
- Whenever they want, they can sell the investments/ instruments and convert them into cash.
- Mobilization of Savings into the most Productive Uses:
- Facilitates transfer of savings from the savers to the investors.
- Financial markets help people to invest their savings in various financial instruments and earn income and capital appreciation.
Types of Financial Markets