financial markets

financial markets - Financial Resources Financial Markets...

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Unformatted text preview: 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. Primary Market- new security is being created and the seller is receiving the proceed of...
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This note was uploaded on 10/05/2011 for the course WCOB 2043 taught by Professor Staff during the Spring '08 term at Arkansas.

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financial markets - Financial Resources Financial Markets...

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