Describe the various types of financial markets and the types of transactions supported by each market in the U.S. and globally.

FIN 350 – Financial Markets and Institutions | FIN 350 – Financial Markets and Institutions | Strayer University

There are two types of markets: the primary market and the secondary market. Each of these markets offers different types of transaction. In the primary market, new securities like stocks and bonds can be traded directly between buyers or sellers. Typically, this type of trading takes place between corporations and large institutions who can afford to buy high quantities of securities. In the secondary market, existing securities are exchanged between investors. This is usually done by brokers in organized markets such as New York Stock Exchange. Stocks, commodities, futures contract, options and mutual funds are all financial instruments that can be traded on this secondary market.

There are also global markets that allow cross-country investment due to their scope. Exchanges such as NASDAQ and London Stock Exchange provide a global platform where companies can issue stocks to raise capital, or to trade securities between investors. Additionally, currency markets such as foreign exchange (FX) provide an avenue for individuals/institutions to speculate on currency movements while hedging against risk by limiting exposure via forward contracts or swaps.