Question

explain in your own words the role of financial market,also explain the flow of funds with suitable examples.Discuss your own experiance of interaction with financial market.

Answer 1

Role of financial market is very intense in a economy because financial market will always be acting as a intermediary and it is also acting as a reflection of the state of an economy because financial market will be helpful in providing the fund and financial market will be also helpful in maintaining of a money flow into the overall economy and financial markets are also responsible for adopting of a fair monetary policy which has been decided by the Federal Reserve.

Financial market will be having a large number of intermediaries who are present into the whole system and they are trying to impact the overall money flow into the economy and they are also responsible for managing of the credit into the economy which will be helpful in order to provide funds to various small entities and large entities which will be helpful in order to expand themselves and provide employment opportunities in to the economy and they will also be helpful in to addition into the total gross domestic product of the economy and it will be impacted through long term development through a chain of growth.

Financial markets are blood of any economy and they are known for providing funds which are timely and cost efficient in nature and they will be customising those funds according to the need of the borrower and they will be providing savers with excess rate of return also, financial market will be having a whole lot of opportunities for a large number of investors and companies in order to provide a large rate of return. Mismanagement of Financial Market can lead to various type of economic down cycles in an economy which can be visible through economic recession in past decade which led to to failure of financial market and widespread Contagion into the overall economy.

Flow of fund will be happening from the savers and investors to the borrowers and financial markets are acting as an intermediary between both of them so financial intermediaries will be trying to channelise the fund between the savers and the borrowers with aim to maintain a proper credit flow into the economy.

I am often invested into the stock market and I am also saving into the commercial banks and I am also trying to earn through a large number of financial securities which are offered by various kinds of companies and banks so I am often trying to earn excess rate of return through financial markets.