Question
In: Economics
Why do international financial markets exist?
Why do international financial markets exist?
Solutions
Expert Solution
Answer:
Financial market-
It is the marketplace that facilitates the short term and long term finance needs of the companies. It is a medium between borrower and lender.
Existance of International financial markets:
Importance of international finance markets can be seen in following ways:
- International Financial market allows banks to borrow money for long as well as short term.
- It facilitates the trading in equity, mutual fund and currency.
- It facilitates investing into bonds and money market securities.
- It facilitates companies to borrow funds from public.
- It brings buyers and sellers together and also transfer the risk.
Firms can meet their short term finance needs from money market where money can be borrowed for shorter period of time.
Capital markets allow MNCs to enable long term funding, companies can come up with the IPO in primary market and raise money from public for long term
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