Stocks, bonds, and precious metals are included in the securities. Markets are defined in a broader way because they contain numerous different financial markets that also include developed economy like ours. Nations and different organizations borrow loans from the financial markets that include surplus and funds.

The role of financial market is that a financial institution consists of a bank, credit unions, firms related to asset management, building societies and stock brokers. These financial institutions are accountable for allocating resources that are finance related. The main role of financial institution is to give commercial, mortgage and real estate loans, accepting deposit, and issuing share certificates. There are five types of financial institutions based on different customer’s category.

As financial markets are divided according to the maturity of securities that traded and the types of assets utilize to back the securities. Therefore, types of financial institutions are as follows. Financial versus physical asset markets, this type of market also known as tangible or real asset market, in which products are include such as wheat, autos, real estate, computers and machinery. Whereas, financial markets totally deal with the stocks, bonds, notes, mortgages, and other real estate claims. In financial market derivative securities are also included whose value derived when the change in prices or other assets occur. Spot and future markets, another type of financial market is spot market that deals with the buying and selling of assets “on-the-spot” delivery bases. Future market are the markets where applicants accept an agreement to buy and sell assets in future in which dates are also mention. Capital and money market, money and capital market are also the type of financial market. In money market short-term, highly liquid debt securities are included.

The world’s largest money market includes New York, London and Tokyo money. Short term markets are usually are less than 1 year, on the other side intermediate term markets are in between 1 to 10 years and long term market means more than 10 years. Primary versus secondary market, the market in which organizations and businesses increases new capital are primary markets. For example if a company sell new issue common stocks in order to increase capital so this is primary market. On the other side, secondary markets are the markets in which existing and previously outstanding securities are being traded between investors. The New York stock exchange market lies in secondary market because it doesn’t issue new stocks and bonds. Private and public market, in private markets transactions are discussed among two parties and also standardized contracts are exchanged with organized exchange.

Private markets in which bank loans and private debt exchanges with indemnity or insurance companies, because the transactions private market made are personal and confidential. In public market common stock and corporate bonds are issued and the transaction held through large group of people. Public securities are liquid whereas in private market securities are less liquid.

RABIA AYUB,

Lahore, December 31.