A financial market is a market in which individuals trade financial securities that comprise currencies, bonds, equities, and derivatives. The financial market is further broken down into:
1) stock market which allows investors to trade in shares of publicly traded companies.
2) The bond market which allows investors to loan money for a stated period at a pre-established interest rate.
3) A money market that enables investors to trade trades highly liquid and short-term maturities.
4) Forex market which allows investors to buy and sell currencies.
5) A derivative market enables investors to trade securities that derive value from their underlying assets. Lastly, the over-the-counter market enables investors to exchange public stocks not listed on stock trading platforms such as the New York Stock Exchange.
The conception of financial markets dates back to the 14th century when the real Merchants of Venice traded securities from other governments. However, modern financial markets took shape in the 18th century with the birth of world-leading stock exchange platforms such as the London Stock Exchange (1773) and the New York Stock Exchange (1792).
The topic of financial markets in learning institutions aims to better develop students’ understanding of the fundamental principles of financial markets. This topic is important to students as it offers a foundation describing how assets are valued and traded in distinct financial markets. I have also had the opportunity to learn about financial markets, and in my experience, the topic enlightened me on stock market prices and returns, the risk, and its impact on the pricing of shares. This has enabled me to take considerate measures before trading securities. This topic also covers the pricing of bonds, the exchange, and interest rates, as well as the features and pricing of financial options and futures. Nonetheless, the most significant contribution of this topic, particularly to your future career, is how to utilize modern academic insights to assess better risks and returns and the tradeoff between the two in your future decision-making.
