Definition
- A financial market is a mechanism that allows people to buy and sell fungible items at lower transaction costs and at prices that follow the efficient market hypothesis
- Fungible items can include financial securities, commodities, other (eg. Carbon credits); as well as derivatives of these
- Market can be defined more strictly as an exchange. Exchange can be physical location (NYSE) or electronic system (NASDAQ); also bilateral (M&A or PE transaction)
Objectives of financial markets
- Raising of capital (capital markets)
- Transfer of risk (derivatives market)
- International trade (currency markets)
Different kinds of financial markets
- Capital markets
- Stock markets
- Bond markets
- Commodity markets
- Money markets
- Derivatives markets
- Futures markets
- Foreign exchange markets
- Insurance markets
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