The financial market is a community of financial instruments and resources that allow you to engage in the sale and purchase of various assets, such as securities, precious metals and others. Its main function is to transfer free capital from one market participant to another. Simply put, it helps the seller and the buyer to find each other, like any type of market.
The financial market is a tool that helps to exchange various goods through the cash equivalent, contributes to the accumulation of capital, financial risk management and international trade. The global financial market is a tool that allows you to do the same on a global scale. A market can trade in one particular asset. Then it is called specialized. The instruments of this market are the financial obligations of issuers - buyers of cash.
There are different sectors and market segments that differ in the types of assets, services and tools that turn around them, as well as the forms of purchase and sale procedures and various conditions for transactions. Given the existing differences between the sectors of the financial market, there is an object with which they are united - free financial resources. The most significant is the division of the market into sectors by various types of services and tools.
Based on these principles, the financial market is divided into:
- financial securities market;
- money market;
- futures market;
- debt capital;
- currency market;
- insurance products market;
- real estate market.
The financial market is a set of tools and funds that allow you to mobilize temporarily free financial resources and turn them into capital. The savings of the population, enterprises and the state that are not spent on consumption are involved in trade processes in the financial market not for their savings, but with the aim of increasing them by making a profit. Some segments of the financial market can give very high rates of return, but the risks are very high. The transformation of accumulations that could be kept “under the pillow” of the population and outside the turnover of enterprises into capital makes it possible to stimulate and accelerate the growth of social production.
The financial market is a very effective tool that helps to effectively distribute the accumulated capital between end consumers. It reveals the level of demand for various types of assets and contributes to its speedy satisfaction. With the help of
market mechanisms, resources are allocated very efficiently. First of all, the investment needs of enterprises are satisfied, which can ensure high return on invested capital. The redistribution of investments in highly profitable spheres allows us to increase the production of popular types of products, thereby increasing their supply on the market and balancing the price level.