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What are some examples of financial markets and their roles?

Modified on: 2018/07/12
A:

Some examples of financial markets and their roles include the stock market, the bond market and the real estate market. Financial markets can also be broken down into capital markets, money markets, primary markets and secondary markets.

A financial market can be thought of as a location where buyers and sellers meet to exchange goods or services at prices predetermined by supply and demand. The New York Stock Exchange (NYSE) is a great example of a physical financial market that is now a digital financial market too, where stocks are bought and sold at prices determined by supply and demand.

The stock market is a financial market where financing is provided through the issuance, buying and selling of shares of stock. The stock market is considered a capital market because it provides financing for long-term investments. While there are many specific examples of the stock market, the NYSE example above is the best.

The bond market is a financial market where financing is provided through the issuance, buying and selling of bonds. The bond market is considered a capital market because it provides financing for long-term investments, although it's possible to buy or invest in bonds with maturities of less than one year. Financial instruments with maturities of less than a year are normally considered to be sold in money markets.

Lastly, the real estate market is a financial market where financing is provided through the buying and selling of physical properties. The real estate market is considered to be the best example of a capital market since almost all real estate properties are highly illiquid and normally help for multiple years.


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