Financial markets play very vital role in the success of overall economy of any nation. They offer platform for both lenders and borrowers to meet their needs. Individuals having surplus money look for avenues to investment their money for lucrative returns. Entrepreneurs always need capital to expand their business.  Financial markets facilitate them to meet on a platform to negotiate and make deal for mutual benefits. These markets help buyers and sellers to trade their financial instruments on their platform. Finance markets offer various kind of financial instruments like bonds, securities, currencies, derivatives etc.

Various Kinds of Financial Markets

Stock Markets

This is one of the most popular financial market. Stock Market is a platform where investors can buy or sell shares of registered companies. Price of the share is decided by financial market on the basis of inputs it get from the positive and negative happenings at particular time. The market prices of the securities are not the indicator of the intrinsic value, as the seller has to pay taxes for the gains. There are two types of stock markets.

Primary Stock Markets

Primary Stock Markets: When private companies need further capital to expand their business they either take bank loans or choose to go public by offering shares to the public at a predetermined price called the offer price. After meeting the primary parameters of the stock market regulators, company is allowed to go public by coming out with Initial Public Offerings (IPOs). The initial offer price of the securities very much determined by the present financial status of the company. Some small and new launched companies offer securities at par price means face and market values of the share remains the same. Whereas some companies which have good performance record and are financial sound offer their share at a premium. This means the company get chance to collect more money from the buyers of equities as though the face value of a share may be $10 per share but it is offered at $ 50 per share  which the buyers has to pay. It means share is offered at a premiumof $40.

Secondary Stock Markets

Secondary Stock Markets: General trading of shares take place in the secondary stock market. The price of the share determined by the market forces on the daily basis. As per the convenience and perception, the individual investors make purchase and sell equities.

Bond Markets

Bond Markets: Bonds are financial instruments issued by Corporations. Municipalities, governments, states to finance their projects. Investors can buy a bond by depositing certain amount for a fixed period at a predetermined interest rate. In other words bond is an agreement between the lender and borrower that entails details of loan and its payments.

Money Markets

Money Markets: These markets trade in financial instruments with high liquidity and short term maturities, and are considered to be more safe but with lesser rate of interests. Financial institutions buy substantial amount of bonds from traders on a wholesale basis. At the retail level mutual funds and fixed deposits in bank for a year or less also have lesser rate interest but shorter maturity period.

Derivative Markets

Derivative Markets: This is basically based on contract between two or more parties and its value is derived from mutually agreed upon underlying financial assets like share, bonds, etc. Derivatives are secondary securities and their value is derived from the primary securities they are linked with. Derivative in itself is worthless. It offer an opportunity for the investor not to trade stock directly, Derivative market trades in futures contracts that derive their value  from the primary instruments stocks, bonds, commodities, etc. to which it is linked.

Forex Markets

Forex Markets: Foreign Exchange market is platform where the participants can trade in various types of world currencies. One can buy and sell different worldcurrencies. The speculators made their investment in such a way that any appreciation in their bought currency become their gain. This market is most liquid market as the cash is an asset with the highest liquidity. It is a decentralized market where brokers across the world trade in global currencies on wide spread global network of computers. The market consists of different intermediary players like, banks, investment management firms, commercial companies, Brokers and investors. This is one of the most lucrative markets.

Commodities Markets

Commodities Markets: These are the platformsthatfacilitate theproducers and buyers to exchange their commodities like agriculture products (wheat, corns, gram, etc.), precious metal (Gold, silver, etc.), energy products (Coal, gas & petroleum products) for money. At the spot commodity markets, the physical goods are exchanged for money.

Cryptocurrency Markets

Cryptocurrency Markets: Cryptocurrencies have been the centre of contention for investors in the last few years. Bitcoin being the first cryptocurrency had appreciated unbelievably thus luring people to go for it. Ethereum is yet another which have also made ground for itself. Cryptocurrencies are digitalized assets available at the centralized & decentralized platforms where two parties can exchange their cryptocurrencies or buy one in exchange of dollar and euro.

Now a days thousands of cryptocurrencies token are traded on independent online Cryptocurrency exchanges with no government regulations. Since majority of these exchange are centralized so there is great risk of hacks and frauds. Decentralized exchanges are also available where the trading among the members take place without any central intervention. Bitcoin and Ethereum are traded on such exchanges.