Financial Market-If we buy or sell financial assets, then we will participate in financial markets in some way. A financial market is market creation and exchange of financial exchange of financial assets.
Functions of Financial Markets:-
As we know it plays a pivotal role in our economy by performing three important functions:-
1. Facilitate price discovery-It has been said that economists " if anyone wants to know about the value of financial assets its simply look at the price in the financial market because the continual interaction among numerous buyers and sellers where they decides the price of financial assets.
2. Provide liquidity to financial assets- Due to technology investors can readily sell their financial assets. Thanks to negotiability and transferability of securities through the financial markets it is possible for companies and other entities to raise long term funds from investors with short term and medium term horizon.
3.Reduce the cost of transaction- The two major cost associated with transacting are Search costs and Information costs. Search Costs comprises explicit costs such advertisement when one wants to buy and sell assets and implicit costs such as effort and time to allocate a customer. Information costs refer to costs incurred in evaluating the investment merits of financial assets.
Functions of Financial Markets:-
As we know it plays a pivotal role in our economy by performing three important functions:-
1. Facilitate price discovery-It has been said that economists " if anyone wants to know about the value of financial assets its simply look at the price in the financial market because the continual interaction among numerous buyers and sellers where they decides the price of financial assets.
2. Provide liquidity to financial assets- Due to technology investors can readily sell their financial assets. Thanks to negotiability and transferability of securities through the financial markets it is possible for companies and other entities to raise long term funds from investors with short term and medium term horizon.
3.Reduce the cost of transaction- The two major cost associated with transacting are Search costs and Information costs. Search Costs comprises explicit costs such advertisement when one wants to buy and sell assets and implicit costs such as effort and time to allocate a customer. Information costs refer to costs incurred in evaluating the investment merits of financial assets.
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