We conclude our series of explanations about the market types, with this article on the financial market and money market.
If you are interested in starting to work on any of them, keep these characteristics in mind to get to know them better. Let's start!
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Market types
financial market
The financial market, also known as capital market, is a physical or virtual place, where supply and demand financial transactions, and where also negotiate the prices of your purchase or sale.
For a market to be considered financial, dmust meet the following characteristics:
- Amplitude: This characteristic refers to the number of titles that are traded. The greater the number of titles that are traded, the greater the breadth of the financial market.
- Depth: Existence of financial instruments capable of coping with situations that may arise within the financial market.
- Flexibility: The price given to the titles must be negotiable.
- Transparency: This characteristic refers to the fact that the price at which the titles are traded is known.
- Freedom: Whether or not there are barriers to entry and exit from the financial market.
money market
The money market is the figure that arises from the relationship between buyers and sellers who carry out exchanges of goods and services within the financial market.
in this market short-term financial assets are traded, with low risk and high liquidity. This market offers banks, savings banks or other financial institutions, titles and securities in exchange for their assets.
We can find different types of money markets:
- credit market: It is the market specialized in short-term operations and between wholesalers whose minimum term is 1 day and maximum of 1 year. In this market, the MIBOR is set, which is the interbank interest rate that is applied in the capital markets of Madrid.
- securities market: This market is divided into two:
- Primary: This market does not have specific organizational rules, since the people who sell their titles do so with the intention of obtaining resources in exchange for them. This type of market is attended by banking entities, companies or banks that need financing to issue debt bonds or shares. Once issued, these assets go to the secondary market, where the sale and purchase is carried out by investors.
- Secondary: This market is made up of the stock market and the Public Debt market. The purchase of assets in this market can be carried out either directly by the interested party, or through a financial intermediary (such as stockbrokers) who are in charge of carrying out all the phases of the operation in question, how to agree on the purchase conditions.
Conclusion
Moving through all these types of markets can be a complicated task for those who do not know how they work. In many cases, these are actions that carry a certain risk, and resorting to financial advice can be the solution to avoid mistakes.
At Alter Finance, we put at your disposal our financial advisory service, where you can consult with us your needs or claims and we will advise you in the best way which is the best way to proceed for you.
Consult with us without obligation. One of our agents will contact you.