FINANCIAL MARKET!!

Financial Market!!

Financial Market

Financial Markets

The field of finance includes markets for diversified functions. Some of these markets play a funding role. They are capital markets, that is to say, places in which officers who have financial needs may find themselves in front of agents willing to advance funds in excess return for appropriate remuneration. The financial market is therefore presented as a component of the capital market which allows financing of the economy. This is the place of issuance and trading of securities, mainly stocks and bonds(Stuart R, 2000).

Financial markets act as intermediaries between those with resources, money and those without them, as they are developed by private individuals, with the participation of the State which regulates the two forces (James C, 1978). The company or individuals generate cash flow (funds) which is applied through dividend payments and to the markets that act as financial originators of funds to provide the same (active financial): Interrelationship of Financial Assets. At the same time the flows generated by the company with its development standard are intended to pay taxes (application of funds to the State) and then distribute profits among its members (Marcia, 1981).

Characteristics of Financial Market

The financial markets or capital markets or also known as Macro System Financial (comprising Capital Markets and Financial Markets), where assets are traded financial instruments or assigning or distributing funds over time. Transfer funds from surplus units to deficit. The difference between Revenue - Cost Operating = Savings (in principle gain) which will be allocated to fixed assets capital. Be self-sufficient economic unit (surplus) when their income can support its costs and operating costs of their investments (higher savings) and instead a unit will not sustain a deficit when it's saving the cost of investments, so financial assets needed to power economic growth (William, 1970). This distribution of assets between deficit and surplus units in is very important for an equitable distribution of income, for the economic progress of each individual entity and therefore to the harmonious growth of the economy as a whole (James C, 1978).

Allow redistribution of risk itself. The companies entering the market because they have good financial risk and greater uncertainty, which are reflected in financial assets issued. Whereby the investor agrees to this financial asset has to consider the high risks that this implies, since the sender knows you will have the funds but the investor is not totally sure of it.

Provide a mechanism for pricing is not from the market itself, but the interaction between the offer and demand, including demand and cash flows that provide them. Therefore one of the functions of financial markets is to inform the participants about how resources are being allocated. In this way control the sender and ensure the permanence of the investor. (Take the example of Argentina in the causes of the crisis financial)

Cause a reduction of transaction costs: information costs (linked to financial assets available for purchase) and search costs (linked to financial asset purchase)

All these characteristics suggest that financial markets that investors interested in gaining access to it as surplus units to provide funds to the ...