Bus499 Essay

1967 WordsDec 2, 20128 Pages
Running Head: Financial Markets Financial Markets FIN350 Angela Harris November 29, 2012 Christine L. Williams Financial markets are several types of financial transaction that one can think of that helps businesses grow and investors make money. It is a market for the exchange of capital and credit including the money markets and the capital markets. There is a strong relationship between financial market improvement and economic growth. Financial markets help to direct the flow of savings and investment in the economy in ways that facilitate the growth of capital and the production of goods and services. The combination of well-developed financial markets and institution, as well as a diverse array of financial products and instruments, suits the needs of borrowers and lenders and therefore the overall economy. The U.S. system is generally considered to be the best developed in the world. Many financial assets are liquid; some may have secondary markets to facilitate the transfer of existing financial assets at a low cost. Financial markets play a critical role in the accumulation of capital and the production of goods and services. The price of credit and returns on investment provide an indication to producers and consumers. These warning signs help direct funds to the consumers, business, governments, and investors that would like to borrow money by connecting those who value the funds to willing lenders. The existence of strong financial markets and institutions also expedites the world-wide flow of funds between countries. In addition, a well organized financial markets and institutions tend to lower search and transactions costs in the economy. By providing a large selection of financial products, with varying risk and pricing structures as well as maturity, a well-developed financial system offers products to participants that
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