Financial markets facilitate various types of financial transactions that help businesses grow and investors earn money. They include capital markets, stock markets, bond markets, money markets, derivatives markets, foreign exchange markets, insurance markets, and commodity markets. Financial markets allow companies and governments to raise funds by issuing stocks, bonds, and other financial instruments, while also enabling investors to buy and sell existing securities. They play a vital role in the economy by connecting those who need to borrow money with those who have money to lend.

1. Introduction to
Financial Markets

2. What is a Financial Market?
Any type of financial transaction
that you can think of that helps
businesses grow and investors
make money.

3. Different Terms for Financial
Markets
• Capital markets,
• Wall Street,
• Stock Market, or
• just the “Market”

4. Types of Financial Markets:
• Capital Market--consists of a primary market and a
secondary market:
• Primary (Bond) Market—newly issued bonds and
stocks are exchanged; and in
• Secondary (Stock) Market—buying and selling of
already existing bonds and stocks take place.
• Bond Market—provides financing by bond issuance
and bond trading
• Stock Market—provides financing by shares or stock
issuance and by share trading.
• Facilitates raising of capital.

5. Types of Financial Markets:
• Money Market—facilitates short term debt financing
and capital (i.e. treasury bills, certificates of deposit)
• Derivatives Market—provides instruments which
help in controlling financial risk.
• Foreign Exchange Market—facilitates the foreign
exchange trading.
• Insurance Market—helps in relocation of various
risks.
• Commodity Market—organizes trading of
commodities.

6. Contribution of Financial Markets:
• They are essential for fund raising
• Borrowers can find suitable lenders
• Banks work as intermediaries—they use the money,
which is saved and deposited by a group of people; for
giving loans to another group of people who need it
• Banks provide financing in the form of loans and
mortgages
• More complicated transactions of the financial market
take place in stock exchange—where a company can
buy others’ company’s shares or can sell own shares to
raise funds
.

7. Basis of Financial Market:
• Borrowers—of the financial market can be
individual persons, private companies, public
corporations, government and other local authorities
like municipalities.
• Individual persons generally take short term or
long term mortgage loans from banks to buy
property.
• Private companies take short term or long term
loans for expansion of business or for
improvement of the business infrastructure.

8. Basis of Financial Market:
• Lenders—are actually the investors. Their invested
money is used to finance the requirements of
borrowers.
• Types of Investments:
• Depositing money in savings bank account
• Paying premiums to insurance companies
• Investing in shares of different companies
• Investing government bonds
• Investing in pension funds and mutual funds