Ralph Joseph Sandoval

FIN 111-0 AY01

Types of Financial Markets

1. Capital Market - Is one in which individuals and institutions trade financial securities.
Organizations and institutions in the public and private sectors also often sell
securities on the capital markets in order to raise funds. Thus, this type of market is
composed of both the primary and secondary markets.
2. Stock Market - allow investors to buy and sell shares in publicly traded companies.
3. Bond Market/Debt Market - is the market where debt instruments are traded. Debt
instruments are assets that require a fixed payment to the holder, usually with
interest. Examples of debt instruments include bonds (government or corporate) and
mortgages.
4. Money Market - Is a segment of the financial market in which financial instruments
with high liquidity and very short maturities are traded. The money market is used by
participants as a means for borrowing and lending in the short term, from several days
to just under a year.
5. Cash Market - is a public financial market in which financial instruments or
commodities are traded for immediate delivery.
6. Derivatives Market - Is the financial market for derivatives, financial instruments like
futures contracts or options, which are derived from other forms of assets. The market
can be divided into two, that for exchange-traded derivatives and that for over-thecounter derivatives.
7. Over the Counter Market - A decentralized market, without a central physical location,
where market participants trade with one another through various communication
modes such as the telephone, email and proprietary electronic trading systems. An
over-the-counter (OTC) market and an exchange market are the two basic ways of
organizing financial markets.