Financial Market 金融市場
Financial Market 金 融 市 場
A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods.
There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded). Markets work by placing many interested buyers and sellers, including households, firms, and government agencies, in one “place”, thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy.
In finance, financial markets facilitate: 財經方面，金融市場促進了：
- The raising of capital (in the capital markets)
- The transfer of risk (in the derivatives markets)
- Price discovery
- Global transactions with integration of financial markets
- The transfer of liquidity (in the money markets)
- International trade (in the currency markets)
- (在資本市場中) 資金的籌集
- (在衍生市場中) 風險的轉移
- (在貨幣市場中) 流通性的轉移
- (在外匯市場中) 國際貿易
– and are used to match those who want capital to those who have it.
Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. This return on investment is a necessary part of markets to ensure that funds are supplied to them.
1. Definition 定義
2. Types of financial markets 金融市場的類別
3. Raising capital 籌資
3.1 Lenders 貸款人
3.1.1 Individuals & Doubles 個人與多人
3.1.2 Companies 公司
3.2 Borrowers 借款人
4. Derivative products 衍生商品
5. Currency markets 貨幣市場
6. Analysis of financial markets 金融市場的分析
7. Financial market slang 金融市場的行話
8. Role (Financial system and the economy) 角色 (金融體系與經濟)
9. Functions of Financial Markets 金融市場的功能
10 Constituents of Financial Market 金融市場的組成
10.1 Based on market levels 以市場層次劃分
10.2 Based on security types 以證券種類劃分
11 See also 另見
12 External links 外部鏈接
In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them.
The term “market” is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (like the NYSE, BSE, NSE) or an electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange.
Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a stock exchange, and people are building electronic systems for these as well, similar to stock exchanges.
Financial markets can be domestic or they can be international.
Types of financial markets 金融市場的類別
Within the financial sector, the term “financial markets” is often used to refer just to the markets that are used to raise finance: for long term finance, the Capital markets; for short term finance, the Money markets. Another common use of the term is as a catchall for all the markets in the financial sector, as per examples in the breakdown below.
Capital markets which consist of: 資本市場中有：
- Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.
- Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
- Commodity markets, which facilitate the trading of commodities.
- Money markets, which provide short term debt financing and investment.
- Derivatives markets, which provide instruments for the management of financial risk.
- Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.
- Insurance markets, which facilitate the redistribution of various risks.
- Foreign exchange markets, which facilitate the trading of foreign exchange.
The capital markets may also be divided into primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets, such as during initial public offerings. Secondary markets allow investors to buy and sell existing securities. The transactions in primary markets exist between issuers and investors, while in secondary market transactions exist among investors.
Liquidity is a crucial aspect of securities that are traded in secondary markets. Liquidity refers to the ease with which a security can be sold without a loss of value. Securities with an active secondary market mean that there are many buyers and sellers at a given point in time. Investors benefit from liquid securities because they can sell their assets whenever they want; an illiquid security may force the seller to get rid of their asset at a large discount.
The financial market is broadly divided into 2 types: 1) Capital Market and 2) Money market. The Capital market is subdivided into 1) primary market and 2) Secondary market.
Raising capital 籌資
Financial markets attract funds from investors and channel them to corporations—they thus allow corporations to finance their operations and achieve growth. Money markets allow firms to borrow funds on a short term basis, while capital markets allow corporations to gain long-term funding to support expansion.
Without financial markets, borrowers would have difficulty finding lenders themselves. Intermediaries such as banks, Investment Banks, and Boutique Investment Banks can help in this process. Banks take deposits from those who have money to save. They can then lend money from this pool of deposited money to those who seek to borrow. Banks popularly lend money in the form of loans and mortgages.
More complex transactions than a simple bank deposit require markets where lenders and their agents can meet borrowers and their agents, and where existing borrowing or lending commitments can be sold on to other parties. A good example of a financial market is a stock exchange. A company can raise money by selling shares to investors and its existing shares can be bought or sold.
The following table illustrates where financial markets fit in the relationship between lenders and borrowers:
Relationship between lenders and borrowers
|Lenders||Financial Intermediaries||Financial Markets||Borrowers|
Who have enough money to lend or to give someone money from own pocket at the condition of getting back the principal amount or with some interest or charge, is the Lender.
Individuals & Doubles 個人或多人
Many individuals are not aware that they are lenders, but almost everybody does lend money in many ways. A person lends money when he or she:
- puts money in a savings account at a bank;
- contributes to a pension plan;
- pays premiums to an insurance company;
- invests in government bonds; or
- invests in company shares.
Companies tend to be borrowers of capital. When companies have surplus cash that is not needed for a short period of time, they may seek to make money from their cash surplus by lending it via short term markets called money markets.
There are a few companies that have very strong cash flows. These companies tend to be lenders rather than borrowers. Such companies may decide to return cash to surplus (e.g. via a share buyback.) Alternatively, they may seek to make more money on their cash by lending it (e.g. investing in bonds and stocks).
- Individuals borrow money via bankers’ loans for short term needs or longer term mortgages to help finance a house purchase.
- Companies borrow money to aid short term or long term cash flows. They also borrow to fund modernization or future business expansion.
- Governments often find their spending requirements exceed their tax revenues. To make up this difference, they need to borrow. Governments also borrow on behalf of nationalized industries, municipalities, local authorities and other public sector bodies. In the UK, the total borrowing requirement is often referred to as the Public sector net cash requirement (PSNCR).
Governments borrow by issuing bonds. In the UK, the government also borrows from individuals by offering bank accounts and Premium Bonds. Government debt seems to be permanent. Indeed the debt seemingly expands rather than being paid off. One strategy used by governments to reduce the value of the debt is to influence inflation.
Municipalities and local authorities may borrow in their own name as well as receiving funding from national governments. In the UK, this would cover an authority like Hampshire County Council.
Public Corporations typically include nationalized industries. These may include the postal services, railway companies and utility companies.
Many borrowers have difficulty raising money locally. They need to borrow internationally with the aid of Foreign exchange markets.
Borrowers having similar needs can form into a group of borrowers. They can also take an organizational form like Mutual Funds. They can provide mortgage on weight basis. The main advantage is that this lowers the cost of their borrowings.
Derivative products 衍生商品
During the 1980s and 1990s, a major growth sector in financial markets is the trade in so called derivative products, or derivatives for short.
In the financial markets, stock prices, bond prices, currency rates, interest rates and dividends go up and down, creating risk. Derivative products are financial products which are used to control risk or paradoxically exploit risk. It is also called financial economics.
Derivative products or instruments help the issuers to gain an unusual profit from issuing the instruments. For using the help of these products a contract has to be made. Derivative contracts are mainly 3 types:
1. Future Contracts 期貨合約
2. Forward Contracts 遠期合約
3. Option Contracts 期權合約
Currency markets 貨幣市場
Seemingly, the most obvious buyers and sellers of currency are importers and exporters of goods. While this may have been true in the distant past, when international trade created the demand for currency markets, importers and exporters now represent only 1/32 of foreign exchange dealing, according to the Bank for International Settlements.
The picture of foreign currency transactions today shows:
- Banks/Institutions 銀行 / 機構
- Speculators 投機客
- Government spending (for example, military bases abroad) 政府開支 (如海外軍事基地)
- Importers/Exporters 出入口商
- Tourists 遊客
Analysis of financial markets 金融市場的分析
Much effort has gone into the study of financial markets and how prices vary with time. Charles Dow, one of the founders of Dow Jones & Company and The Wall Street Journal, enunciated a set of ideas on the subject which are now called Dow Theory. This is the basis of the so-called technical analysis method of attempting to predict future changes. One of the tenets of “technical analysis” is that market trends give an indication of the future, at least in the short term. The claims of the technical analysts are disputed by many academics, who claim that the evidence points rather to the random walk hypothesis, which states that the next change is not correlated to the last change. In recent years the rise of algorithmic and high-frequency program trading has seen the adoption of momentum, ultra-short term moving average and other similar strategies which are based on technical as opposed to fundamental or theoretical concepts of market Behaviour.
The scale of changes in price over some unit of time is called the volatility. It was discovered by Benoît Mandelbrot that changes in prices do not follow a Gaussian distribution, but are rather modeled better by Lévy stable distributions. The scale of change, or volatility, depends on the length of the time unit to a power a bit more than 1/2. Large changes up or down are more likely than what one would calculate using a Gaussian distribution with an estimated standard deviation.
Financial market slang 金融市場的行話
Poison pill 毒藥 / 拼購阻撓
when a company issues more shares to prevent being bought out by another company, thereby increasing the number of outstanding shares to be bought by the hostile company making the bid to establish majority.
Quant 寬特 / 量化分析師 (數量化研究分析技術的分析師)
a quantitative analyst with a PhD (and above) level of training in mathematics and statistical methods.
Rocket scientist 火箭專家
a financial consultant at the zenith of mathematical and computer programming skill. They are able to invent derivatives of high complexity and construct sophisticated pricing models. They generally handle the most advanced computing techniques adopted by the financial markets since the early 1980s. Typically, they are physicists and engineers by training; rocket scientists do not necessarily build rockets for a living.
White Knight 白騎士
a friendly party in a takeover bid. Used to describe a party that buys the shares of one organization to help prevent against a hostile takeover of that organization by another party.
a deliberate structuring of payments or transactions to conceal it from regulators or other parties, a type of money laundering that is often illegal.
the difference between the highest bid and the lowest offer.
Role (Financial system and the economy) 角色 (金融體系與經濟)
One of the important requisite for the accelerated development of an economy is the existence of a dynamic financial market. A financial market helps the economy in the following manner:
Saving mobilization 存款動員
Obtaining funds from the savers or surplus units such as household individuals, business firms, public sector units, central government, state governments etc. is an important role played by financial markets.
Financial markets play a crucial role in arranging to invest funds thus collected in those units which are in need of the same.
National Growth 國家增長
An important role played by financial market is that, they contributed to a nation’s growth by ensuring unfettered flow of surplus funds to deficit units. Flow of funds for productive purposes is also made possible.
Entrepreneurship growth 企業成長
Financial market contribute to the development of the entrepreneurial claw by making available the necessary financial resources.
Industrial development 工業發展
The different components of financial markets help an accelerated growth of industrial and economic development of a country, thus contributing to raising the standard of living and the society of well-being.
Functions of Financial Markets 金融市場的功能
Intermediary Functions 中介功能
The intermediary functions of a financial markets include the following:
Transfer of Resources 資源的轉移
Financial markets facilitate the transfer of real economic resources from lenders to ultimate borrowers.
Enhancing income 提高收入
Financial markets allow lenders to earn interest or dividend on their surplus invisible funds, thus contributing to the enhancement of the individual and the national income.
Productive usage 有效應用
Financial markets allow for the productive use of the funds borrowed. The enhancing the income and the gross national production.
Capital Formation 資本組建
Financial markets provide a channel through which new savings flow to aid capital formation of a country.
Price determination 價格定位
Financial markets allow for the determination of price of the traded financial assets through the interaction of buyers and sellers. They provide a sign for the allocation of funds in the economy based on the demand and supply through the mechanism called price discovery process.
Sale Mechanism 銷售機制
Financial markets provide a mechanism for selling of a financial asset by an investor so as to offer the benefit of marketability and liquidity of such assets.
The activities of the participants in the financial market result in the generation and the consequent dissemination of information to the various segments of the market. So as to reduce the cost of transaction of financial assets.
Financial Functions 金融功能
- Providing the borrower with funds so as to enable them to carry out their investment plans.
- Providing the lenders with earning assets so as to enable them to earn wealth by deploying the assets in production debentures.
- Providing liquidity in the market so as to facilitate trading of funds.
- it provides liquidity to commercial bank
- it facilitate credit creation
- it promotes savings
- it promotes investment
- it facilitates balance economic growth
Constituents of Financial Market 金融市場的組成
Based on market levels 以市場層次劃分
Primary market 初級市場
Primary market is a market for new issues or new financial claims. Hence it’s also called new issue market. The primary market deals with those securities which are issued to the public for the first time.
Secondary market 二級市場
It’s a market for secondary sale of securities. In other words, securities which have already passed through the new issue market are traded in this market. Generally, such securities are quoted in the stock exchange and it provides a continuous and regular market for buying and selling of securities.
Based on security types 以證券種類劃分
Money market 貨幣市場
Money market is a market for dealing with financial assets and securities which have a maturity period of up to one year. In other words, it’s a market for purely short term funds.
Capital market 資本市場
A capital market is a market for financial assets which have a long or indefinite maturity. Generally it deals with long term securities which have a maturity period of above one year. Capital market may be further divided in to: (a) industrial securities market (b) Govt. securities market and (c) long term loans market.
資本市場是金融資產的市場，履約期長或不定，通常都處理超過一年履約期的長期證券。資本市場可以再分為：(a)工業證券市場 (b)政府證券市場 (c)長期貸款市場。
Equity markets 股權市場
A market where ownership of securities are issued and subscribed is known as equity market. An example of a secondary equity market for shares is the Bombay stock exchange.
Debt market 債務市場
The market where funds are borrowed and lent is known as debt market. Arrangements are made in such a way that the borrowers agree to pay the lender the original amount of the loan plus some specified amount of interest.
Derivative markets 衍生品市場
Financial service market 金融服務市場
A market that comprises participants such as commercial banks that provide various financial services like ATM. Credit cards. Credit rating, stock broking etc. is known as financial service market. Individuals and firms use financial services markets, to purchase services that enhance the working of debt and equity markets.
Depository markets 存管市場
A depository market consist of depository institutions that accept deposit from individuals and firms and uses these funds to participate in the debt market, by giving loans or purchasing other debt instruments such as treasure bills.
Non-Depository market 非存管市場
Non-depository market carries out various functions in financial markets ranging from financial intermediary to selling, insurance etc. The various constituency in non-depositary markets are mutual funds, insurance companies, pension funds, brokerage firms etc.
See also 另見
- Finance capitalism 金融資本主義
- Financial crisis 金融危機
- Financial instrument 金融工具
- Financial market efficiency 金融市場效率
- Brownian Model of Financial Markets 布朗模式的金融市場
- Investment theory 投資理論
- Quantitative behavioral finance 行為量化金融學
- Slippage (finance) 滑脫 / 滑價 (金融)
- Stock investor 股票投資者
- Financial Market Theory of Development 金融市場發展的理論
Financial markets 金融市場
Public market 公開市場
- Exchange 交易所
- Securities 證券
Bond market 債券市場
- Bond valuation 債券股價
- Corporate bond 企業債券
- Fixed income 固定收益
- Government bond 政府債券
- High-yield debt 高收益債券
- Municipal bond 市府債券
Stock market 股票市場
- Common stock 普通股
- Preferred stock 優先股
- Registered share 記名股票
- Stock 股票
- Stock certificate 股票證書
- Stock exchange 股票交易所
- Voting share 投票份額
Derivatives market 衍生品市場
- Credit derivative 信貸衍生品
- Futures exchange 期貨交易所
- Hybrid security 混合證券
- Securitization 證券化
- Forwards 遠期
- Options 期權
- Spot market 現貨市場
- Swaps 掉期
Foreign exchange 外匯
- Currency 貨幣
- Exchange rate 匯率
Other markets 其他市場
- Commodity market 商品市場
- Money market 貨幣市場
- Reinsurance market 再保市場
- Real estate market 房地產市場
Practical trading 實際買賣
- Clearing house 結算所
- Financial market participants 金融市場參與者
- Financial regulation 金融監管
Finance series 金融系列
- Banks and banking 銀行與銀行事務
- Corporate finance 企業融資
- Personal finance 個人理財
- Public finance 公共財政
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Source > Wikipedia at http://en.wikipedia.org/wiki/Financial_market
Translated by > BlogHost — hkTan
Word Count > approx.3100 words in English