Take a Look at the Different Types of Financial Markets
The market for the exchange of capital and credit is called financial market. These markets provide facilities for the buying and selling of financial claims and services. The participants on the demand and supply sides of these markets are financial institutions, agents, brokers, dealers, borrowers, lenders, savers and others who are linked by laws, contracts, covenants and communication networks.
Financial markets are classified as primary (direct) and secondary (indirect). The primary markets deal in new financial claims or new securities. On the other hand, secondary markets deal in securities already issued or existing or outstanding. More often the classification is into money and capital markets. Money market deals with short-term claims having a period of maturity of one year or less, and the latter does so with long-term claims having period of maturity of more than one year.
Stock Markets
A market in which shares of stock are bought and sold is called stock market. The word 'stock', in American usage, means equity or ownership in a corporation. A share is the basic unit of a company's capital, which it tries to raise from the stock market. When you own a stock, you are referred to as a share or stockholder. A stock shows that you own a small fraction of a corporation; hence if you buy stock in the Pepsi Corporation and they come out with a 'cool' new drink that becomes a hit, then you get to share the profits. A stock also gives you the right to make decisions that may influence the company. Therefore, the more stocks you own, the more decision-making power you have.
FOREX Market
Foreign Exchange is the simultaneous buying of one currency and selling of another. The foreign exchange market is the largest financial market in the world. The world's currencies are on a floating exchange rate and are always traded in pairs. Here, settlement is made for international purchases and sales, i.e., for exports and imports, as also for payments international purchases and sales of assets. Operating virtually round the clock, the forex market trades enormous amounts of money, estimated at several trillion dollars daily.
The forex market is not centrally located. It is an over-the-counter market where business is conducted through telephones, computers, fax machines etc. Among its members are large corporations, commercial banks, money centers, pension funds and investment banking firms. As individuals or companies from one country trade across borders, the need for foreign currency arises. The resultant trading differential generates profits and keeps the forex market in animation.
Debt Market
Debt is the liability or obligation in the form of bonds, loan notes, or mortgages, owed to another person or persons and required to be paid by a specified date (maturity).
Read more at Buzzle: http://www.buzzle.com/editorials/8-9-2004-57650.asp
