Financial markets - Definition and Overview

The financial markets are markets which facilitate the raising of funds or the investment of assets, depending on viewpoint. They also facilitate handling of various risks. The financial markets can be divided into different subtypes:

• Capital markets consists of:
  • Stock markets, which facilitates equity investment and buying and selling of shares of stock.
  • Bond markets, which provides financing through the issue of debt contracts and the buying and selling of bonds and debentures.
• Money markets, which provides short term debt financing and investment.
• Derivatives markets, which provides instruments for handling of financial risks.
• Futures markets, which provide standardised contracts for trading assets at some forward date; see also forward market.
• Insurance markets, which facilitates handling of various risks.
• Foreign exchange markets

These markets can be either primary markets or aftermarkets.