What Is A Financial Market
                     WHAT IS A FINANCIAL MARKET?
What Is a Financial Market?
• A financial market is where people buy and sell financial assets such as stocks, 
bonds, insurance and commodities. 
• These markets can be physical, virtual or a combination of both. For example, 
the New York Stock Exchange (NYSE) has a physical location where trading 
happens, but you can also buy and sell on the NYSE via digital means.
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Common traits of financial markets 
• Buyers
• Sellers
• Specific predefined assets
• Value transactions
• Rules and regulations to govern how all these things are handled
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DIFFERENT FINANCIAL MARKETS
Capital Markets
• Technically, capital markets are any markets that involve the movement of 
capital from entity to entity, usually with those who have capital providing it to 
those who need capital in exchange for some value. 
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Money Markets
• Money markets developed as money became a commodity. When you invest 
in money markets, you’re usually investing in the value of a currency or in the 
chance that debts will be paid back with appropriate interest.
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Futures Markets
• When you invest in the futures market, you’re investing in an asset or 
commodity in the future but you’re agreeing upon a price today. The goal as 
an investor is to agree to a price that leaves you with a profit in the future.
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Commodity Markets
• Commodity markets involve the buying and selling of primary products, such 
as raw materials. Some examples of commodities that can be traded include 
oil, beef and gold. 
• One of the major differences between commodity markets and futures 
markets is that commodity markets trade on the current value.
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Derivatives Markets
• Assets on the derivatives markets are derived from something else. For 
example, you can purchase gold derivatives. 
• Doing so doesn’t mean you own any gold it means that you own an investment 
tied to the value of gold. If gold values go up, then you potentially make 
money on your investment.
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Insurance Markets
• Insurance markets are just that markets in which you can purchase insurance 
products or invest in insurance. This includes annuities, which are insurance 
products that pay out an agreed-upon amount in the future.
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Foreign Exchange Markets
• You might have heard the term “forex.” That stands for the foreign exchange 
market, which is a market related to currencies. Forex determines what the 
exchange rate is for currencies.
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Why Are Financial Markets Important?
• The financial markets are important because they provide a regulated, 
common space in which people and businesses can invest and trade. Most 
people aren’t going to invest in all the possible markets. 
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