Financial Markets

The financial market is essentially the term used to describe the 'money industry'.

The financial market is the parameters in which business and individuals can facilitate the raising of funds or the investment of assets, depending on their needs. In two words, financial markets are all about wealth creation.

Financial markets have a degree of risk attached and are negotiated generally by those who have experience in the buying and selling of stocks, shares and currencies - usually brokerage firms.

However in recent years the financial markets have been inundated with individuals who are keen to start or indeed build their asset portfolio.

This has been aided by the increase in online trading facilities such as ComSec which allows home traders to communicate their requirements and arrangements via their PC direct to the brokerage firm.

For the purposes of the definition the financial market can be divided into different categories:

• Stock markets, which facilitate the buying and selling of stocks and shares.
• Bond markets, which provides financing through the buying and selling of bonds and debentures.
• Money markets, which provides short term debt financing and investment.
• Derivatives markets, which provides instruments for handling of financial risks.
• Futures markets, which provide standardized contracts for trading assets at some forward date.
• Insurance markets, which facilitates handling of various commercial risks and opportunities.
• Foreign exchange markets which deal with international currencies.