Commerce · Ch 1 — Financial Markets
Summary
Summary
- A financial market is a market for the creation and exchange of financial assets. It helps mobilise and channel savings into their most productive uses, aids price discovery, and provides liquidity to financial assets.
- The money market is a market for short-term funds, dealing in monetary assets with a maturity of less than one year. Its instruments include treasury bills, commercial paper, call money, certificates of deposit and commercial bills.
- The capital market is where long-term funds are mobilised by corporate undertakings and the government. It is divided into the primary market (which deals with new securities) and the secondary market (where existing securities are bought and sold).
- Stock exchanges are organisations that provide a platform for buying and selling existing securities. They provide a continuous market, help in price discovery, widen share ownership and provide scope for speculation. …