Exercises · Q1
Q.What is a financial market? Give its definition.
Tamil Nadu DgeTextbookSubjectiveImportance★★★★★
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✓ Free question
A financial market is a market, or institutional arrangement, where financial assets (financial instruments/securities) such as shares, debentures, bonds and treasury bills are created, issued, bought and sold. It brings together surplus units (savers/investors who have funds beyond their immediate needs) and deficit units (borrowers/issuers who need funds for investment or expenditure), so that the economy's savings can be transformed into productive investment.
✓Final answer
A financial market is the mechanism through which financial assets are created and traded, channelling funds from savers (surplus units) to borrowers (deficit units).
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