Financial Markets types

Financial markets can be divided into different subtypes:

For the transferred assets

• Money Market: The trading with money or financial assets with a maturity of short-term, highly liquid assets usually within less than a year.
• Capital markets: financial assets are traded with a maturity of medium and long term basis to carry out certain processes of investment.
• Stock markets, which provide financing through the issuance of shares and allow the subsequent exchange of these.
• Bond markets, which provides financing through the issuance of bonds and allow the subsequent exchange of financial marketing estos.el is one way by which esclarem diversity of financial generosity.

Depending on their structure can be

• Organized markets.
• Unorganized market is called in English ("Over The Counter").

According to the negotiation of financial assets

• Primary markets: financial assets are created. In this market the assets are transferred directly by the issuer
• Secondary market: Only exchange existing financial assets, which were issued at an earlier time. This market allows holders of financial assets and sell the instruments that were issued in the primary market (or that had already been transmitted on the secondary market) and are in his possession, or purchase other financial assets. (Lilibet)

Other markets

• Commodities markets, allowing trading commodities.
• Derivatives markets, which provides tools for financial risk management.
• Forwards markets, which provide standardized forward contracts for trading products at some future date, see also forward.
• Insurance markets, allowing the redistribution of various risks, see the insurance contract.
• Foreign exchange market, which allows the exchange of foreign currencies or currency.

Financial Markets Features

• Size: Number of securities which are traded on a financial market. The more securities are traded on the wider financial market. So as shown above, financial markets are essentially based on market speculation.
• Depth: The existence of supply and demand curves above and below the equilibrium price that exists at a given time (there are people who would be able to buy at a price above the equilibrium price. And if there is anyone who is willing to sell at a lower price).
• Freedom: There are no barriers to entry or exit from the financial market.
• Flexibility: Prices of financial assets that are traded on a market, to change to a change occurring in the economy.
• Transparency: can obtain information easily. A financial market is more transparent when it is easier to get the information.

The perfect financial market would be one that we find:

• Large numbers of actors involved both the supply side as the demand side. So no one can influence the formation of financial asset prices. (High extent and depth)
• There are no transaction costs or taxes, or interest rate fluctuations or inflation. (High freedom)
• The assets are divisible and indistinguishable. (High flexibility)
• That there is perfect information, that everyone knows the same thing. (Added transparency)