Has the financial markets been changed for last twenty years?
If it has changed, what types of changes could be happenedin financial markets?
The Many Roles of Financial Markets
The economic functions of financial markets include :
The provision of choice in the timing of consumption
The management of risk
The clarification of the role of management
The provision of information
The Many Roles of Financial Markets The Provision of Choice in The Timing of Consumption Financial markets and instruments enable individuals to choose more effectively between current and consumption TOMORROW OR TODAY?
The Many Roles of Financial Markets 2. The Management of Risk Financial markets allow efficient risk sharing among investors . There are two types of risks:
The Many Roles of Financial Markets 3. The Clarification of the Role of Management Financial markets enable the separation of ownership from day-to-day managerial control
Net Present Value
The Many Roles of Financial Markets 4. Provision of Information By providing information concerning performance the presence of a well-functioning stock market and enables poor management
The Many Roles of Financial Markets The operation of well-functioning financial markets
bring borrowers and lenders together,
improve risks sharing,
lead to the optimal allocation of resources,
provide information to market participants,
allow the separation of ownership from management and help monitor management.