Financial Market
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ScribdTranslationsFinancial Market
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ScribdTranslationsWhat is a financial market?
In economics, a financial market or capital market is a space in which
exchanges of financial instruments are carried out and their prices are
defined.
They are the forums and sets of rules that allow participants to carry
out investment, financing and hedging operations, through different
intermediaries, through the negotiation of various financial
instruments.
Functions of financial markets
Capture savings and channel them, in the form of loans, towards
investment.
Offer those products that adapt to the needs of those who want to lend
their savings and investors, so that both obtain the greatest satisfaction
at the lowest cost.
Reduce intermediation costs, allowing greater circulation of products.
Achieve monetary stability.
Characteristics
Breadth: Number of financial securities traded in a financial market. The more securities that are
traded, the broader the financial market will be.
Depth: It is the existence of financial securities that cover various eventualities in a financial
market. For example, there are financial securities that protect against the rise or fall of the price
of a specific item.
Freedom: There are no barriers to entry or exit from the financial market.
Characteristics
Flexibility: Prices of financial assets, which are negotiated in a market, to
change due to a change that occurs in the economy.
Transparency: Possibility of obtaining information on the price of the financial
asset.
The assets are divisible and indistinguishable.
Debt market
• The purchase and sale of securities can be carried out through primary
markets, that is, when the traded value is issued for the first time or
through secondary markets, which implies the commercialization of a
previously acquired security, through public and private offers.
Debt market
Debt securities are also known as fixed income instruments since they
promise the holder a fixed flow of payments that is determined according to
a specific formula known in advance. The purchase and sale of securities
can be carried out through primary markets, that is, when the traded value is
issued for the first time or through secondary markets, which implies the
marketing of a previously acquired security and through public and private
offers. The titles that are marketed in this market.
• Term: short, medium and long.
• Issuer: public (Federal Government, decentralized organizations, states
and municipalities, Bank of Mexico) and private (private initiative
companies).
• Risk classification: with or without investment grade.
• Type of rate: fixed, variable, or indexed.
AND
• Legal characteristics: promissory notes, stock certificates, among others.
stock market
The purchase and sale of shares can be carried out through primary
markets, when they are issued for the first time, or through secondary
markets when the securities have already been previously acquired
through public and private offers.
The titles sold in this market can be classified by:
• Issuer: private companies or investment companies.
Type: preferred or common.
Other types of financial markets
Stock market: is one in which transactions are carried out on a
recognized stock exchange. In Mexico the derivatives exchange is
called: Mexican Derivatives Market (MexDer). MexDer currently
operates futures and option contracts on the following financial assets:
dollar, euro, bonds, stocks, indices and interest rates.
cta men t e xtrabursátil operations without counterparty
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