Financial markets create products that provide returns for people who have accumulated funds, making these funds available to people who need them.
Financial intermediaries collect these accumulated funds from individuals and businesses and loaning them out to other individuals and businesses that could make use of them.
Individuals, businesses, government and international save and borrow.
Income that is not used for consumption can be used to increase aggregate demand. By investing in capital the productive capacity of an economy increases.
People nowadays have strayed away from the more traditional approach to saving in banks and choose to save in financial instruments such as the share market or others present to an individual.
When a company sells shares to an investor it is a Primary Market Transaction and when investors sell these shares to other investors it becomes a secondary market transaction.
The main financial markets are the: share market (where shares are traded), the debt market (where debt is borrowed or lent), the derivatives market (where assets are traded based on the value of other financial assets) and the foreign exchange market.
There are a variety of financial markets products. These include consumer credit, housing loans, shares financial futures.
The financial intermediaries can be divided into banks or non-bank financial institutions such as finance companies, merchant banks, credit unions, superannuation.
The share market is the market for trade in shares or equity ownership of a percentage of a company. The All Ordinaries Index is a measure of the changing value of companies listed on the ASX.
Companies who have floated on the share market must pay dividends to share holders. If a share has been sold for more than it was purchased then the profit is known as a capital gain.
The share market provides income for investors and is also an indicator of economic conditions demonstrating the level...