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financial markets - Financial Resources Financial Markets...

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Financial Resources Financial Markets Financial Market- Market where financial instruments are bought and sold -Some are public, while some are private Characteristics of a “good market” 1. A market where trading (buying/selling) takes place in and orderly manner - Sufficient information is available that allows participants to interpret supply and demand - All information should be available to all participants at the same time and reasonable cost - The market is reasonably transparent 2. Assuming NO NEW INFORMATION, a person should be able to buy or sell close to the last trade price; this is called price continuity (no wild swing in prices) 3. The cost of buying or selling should be relatively low to the value bought/sold 4. All participants have equal access to markets; transactions are executed in the order received 5. Prices adjust rapidly to new information ex: once earnings are announced, in a well- functioning market prices should rise/fall quickly Classifications of financial markets: 1.
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