Financial markets

Financial markets are the mechanisms by which buyers and sellers of financial securities, commodities, and other fungible items of value interact. They facilitate the pricing, sale and distribution of these assets in an efficient manner while providing liquidity to companies or individuals who may be seeking capital investments or a return on their invested funds. Financial markets can take many different forms including stock exchanges (where stocks are traded), bond markets for government debt instruments (Treasury bonds) as well as money market instruments such as certificates of deposit (CDs), futures contracts for commodity prices and foreign exchange trading between currencies.

The most common type of financial market is a stock exchange where investors buy shares in publicly listed companies with the intention to make profits either through dividends paid out periodically or from price appreciation when they sell their holdings at some point in future. Bonds represent another form of fixed income investment whereby governments issue debt obligations that offer periodic interest payments based upon predetermined terms outlined within each bond’s prospectus document. Money market instruments include short-term loans issued mainly by banks offering higher returns than traditional savings accounts but also carry increased risk due to shorter maturity dates associated with these types products; CDs being one example here

In addition to conventional asset classes like stocks & bonds there exist derivatives which allow traders/investors exposure to more complex strategies involving leverage, margin trading etc., Futures contracts provide participants with an avenue by which they can speculate on changes in underlying asset values without having ownership over those particular assets themselves; options give holders the ability purchase specific amounts at pre-determined time frames allowing them hedge against potential losses should certain events occur during specified timespans whilst forwards enable two parties agree upon delivery prices contingent on future outcomes

Finally it’s worth noting that modern day technology has allowed greater access into financial markets worldwide via online brokerages enabling all kinds users participate regardless geographical location size portfolio – something not possible even just few decades ago!