The financial market is a community of financial instruments and resources that allow you to buy and sell various assets, such as securities, precious metals and others. Its main function is to move free capital from one market participant to another. To put it simply, it helps the seller and the buyer find each other, like any kind of market.
The financial market is a tool that helps to exchange various benefits through a monetary equivalent, promotes capital accumulation, financial risk management and international trade. The global financial market is a tool that allows you to do the same on a planetary scale. The market can trade in any one specific asset. Then it is called specialized. The instruments of this market are the financial obligations of issuers - buyers of funds.
There are different sectors and market segments with different types of assets, services andinstruments that turn into them, as well as forms of sale and purchase procedures and various conditions for transactions. With 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 for different types of services and instruments.
The financial market based on these principles is divided into:
- financial securities market;
- money market;
- futures market;
- debt capital;
- currency market;
- market of insurance products;
- real estate market.
The financial market is a set of tools and means that allow you to mobilize temporarily free financial resources and turn them into capital. The savings of the population, enterprises and the state not spent on consumption participate in trading 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, however, the risks are also very high. The transformation of savings, which could be kept "under the pillow" of the population and outside the turnover of enterprises, into capital allows stimulating and accelerating the growth of social production.
The financial market is a very effective tool that helps to effectively distribute the accumulated capital among end users. Hereveals the level of demand for various types of assets and contributes to its speedy satisfaction. With the help of market mechanisms, resources are distributed very efficiently. First of all, the investment needs of enterprises that can provide a high return on invested capital are met. The redistribution of investments in highly profitable areas allows increasing the production of demanded types of products, thereby increasing their supply on the market and balancing the price level.
