Financial markets

In finance, financial markets facilitate:

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• The raising of capital (in the capital markets);
• The transfer of risk (in the derivatives markets); and
• International trade (in the currency markets).

They are used to match those who want capital (borrowers) to those who have it (lenders).

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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.

Related Topics:
Receipt - Securities - Interest - Dividends

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In practice, financial markets also facilitate unbridled greed through speculation.

Related Topics:
Greed - Speculation

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Financial markets: Disambiguation ►