What's the financial market
Goods in the financial market are funds and securities that are the object of sale in the market.
The money from the economic point of view - it's liquid assets that can be relatively quickly and without major losses cashed.
Securities - the main product of the market, a unique object of sale in this market. Securities as financial market instruments, are documents - evidence of debt or ownership.
Securities are important component of a kind of "commodity products" - money. They should have the following characteristics:
- Standard - the inscription of the issuer, the amount of the income, the information on the issuer;
- Market-confirmation that the security may apply in the market;
- Liquidity - evidence that the security can be implemented at any time without much loss;
- Regulation of the state - the presence of standards, the registration issue.
By the nature of charging for credit instruments of the financial market can be divided into the following types:
- Easy loan. This is a loan in the amount of P, which is granted subject to a return in the amount of T years, increased by the amount of the so-called interest payments, which are charged at a rate per cent per year and the amount which is available to the borrower;
- Discount loan. A loan, the nominal value of which is greater than the amount that is actually put at the disposal of the borrower at the time of loan disbursement. The difference between these values is a form of borrowing that is charged from the borrower in advance;
- A loan with fixed payments. This is a loan in the amount of P, which is available in T years, the repayment of the loan is carried out annually, beginning with the first year for T years at a fixed rate of P *. This kind of loans extended as consumer loans;
- Coupon bonds. It has a maturity T, the nominal value of F, which is indicated on the very bonds and payable at maturity of the bond. Coupon bond belongs to T * P * value coupons each entitling the holder to an annual payment of bonds in the amount of P *.
Development and improvement of financial market contributes to the emergence of various securities, which function in its different segments, allow postpone today's consumption, accumulate savings and direct them into the sphere of business.