Question

There are many different financial markets in a developed economy like the United States. Different financial markets serve different customers and different parts of the country. Financial markets vary depending on a security's maturity and the type of asset backing that security. These markets can be categorized into different classifications. Other classifications could be made, but these breakdowns show that there are many types of financial markets and the distinctions among them are often blurred and unimportant except as a general point of reference.

Physical asset markets exist for wheat, autos, and real estate, while financial asset markets deal with stocks, bonds, and mortgages. Spot markets are where assets are sold for almost immediate delivery, while future markets are markets in which participants agree today to buy or sell an asset months from now. Capital markets are the markets for intermediate- or long-term debt and corporate stocks, while money markets are the markets for short-term, highly liquid debt securities. Secondary markets are markets in which existing, already outstanding securities are traded among investors, while primary markets are the markets in which corporations raise new capital. In private markets transactions are negotiated directly between two parties, while public markets are markets where standardized contracts are traded on organized exchanges.
Financial markets have experienced many changes in recent years. Technological advances in computers and telecommunications, along with the globalization of banking and commerce, have led to deregulation, which has increased competition throughout the world.
An important trend in securities is the increased use of derivatives, which are securities whose values stem from the price of some other underlying asset. These securities can be used to reduce risks or to speculate. The purpose of a hedging operation is to reduce risk exposure.

Answer 1

Financial Markets

Step-by-step explanation:

Financial markets commonly refer to any market whereby equity trading takes place, including, but not limited to, the stock market, equity market, foreign exchange market, and derivative market.

They are important to the proper functioning of capitalist economies.

By resource allocation and creating cash flow for companies and business-people they play an important role in enabling the smooth running of capitalist economies.

Financial markets make selling their financial holdings convenient for buyers and sellers.