Business is the part of an economics system. In households the financial system is called a “saver” because it can save your money.
On the other hand business firms are investing in money. So that’s why it is called “investor’s”. So a business firm is earning a profit from households who buy an investment for security purposes. They can eventually return the money to a business firm. This process is called financial marketing.
The Financial market acts like a link between households and business firms. So that households can buy the investment from the business firm and in the end households can transfer the funds to the business firm.
The main objectives of financial marketing is that it can help the households to save money in the best possible ways. On the other hand financial market helps a business firm with their requirements of funds. The linking of savers and investors works with the help of mobilising the funds between them.
To make it clear, financial marketing is not a physical market. Like if you want to eat something you can go to the restaurant and eat food and pay him. Obviously in each and every business you will find both buyers and sellers. However the Financial market is an online market where you can buy the shares of a desired company (stock/share exchange) and acts like a type of security which we buy.
The create and exchange meaning is different as “create” means that when any company issue his shares in the online trading market. On the other hand “exchange” means that the existing shares which is available in online trading platform.
An example of a famous trading platform is “Angel broking” along with many others that are available. From here you can buy a share and sell your share too.
Function of Financial markets :
- The mobilisation of saving.
- To provide liquidity to shares.
- Reducing the costs of transaction.
- Facilitate price discovery.
Types of financial markets :
- Money markets : The money market is a short term market. The classification into the maturity of financial instruments traded in less then 1 year.
- Capital marketing : The capital marketing is long term markets. The classification into the maturity of financial instruments is traded more than 1 year.