A financial market or stock market is a place where people trade in financial Securities such as stocks and bonds, commodities such as metals or agricultural products, and other fungible items.
Types of Financial Markets
In the financial sector we employ the word “financial market” to refer to the market that is used to raise finance. There are basically two types of Financial Market- capital market and money market. Capital Market is used for long term finance and Money Market is used for short term finance.
Capital Market
Capital market is that Financial Market that trade in securities such as stocks and bonds. In such a market both private and public limited companies sell their shares and bonds. The main idea behind selling their securities is to raise funds through public investment.
Capital markets which consist of:
- Stock markets
- Bond markets
The capital markets may also be divided into primary markets and secondary markets
Money Market
The is the financial market in which financial instruments with high liquidity such as Treasury bills, commercial paper, municipal notes are sold and bought. This is meant for short term lending or borrowing.
The investments in money market are also called cash investments.
