Olermo, Jolly Aldyn C.

2BSA-4
Financial Markets

1. The importance of the financial market in a country's economy

Financial markets contribute in the efficient flow of savings and
investment in the economy, facilitating capital accumulation and the production
of goods and services. Borrowers and lenders, as well as the entire economy,
benefit from a combination of well-developed financial markets and institutions,
as well as a diverse array of financial goods and instruments.
In today's environment, the financial market has become a source of
judgement point on how global or national economies are performing. On the
stock and bond exchange markets, the impact of government economic policies
such as fiscal and monetary policy can be easily witnessed. The volume of stock
and bond trading reflects the performance of both enterprises and the
government.
Furthermore, effective financial markets and institutions tend to reduce
the cost of searching and transacting in the economy. A well-developed financial
system delivers goods to participants that are a close match for borrowers and
lenders' demands by providing a wide range of financial products with varied
risk and pricing structures as well as maturity. Individuals, organizations, and
governments in need of finances can quickly learn which financial institutions or
financial markets might be able to help them and how much it will cost them.
This allows investors to evaluate the cost of financing to their expected return on
investment, allowing them to make the best investment decision for them.
Financial markets direct credit distribution throughout the economy in this way,
making it easier for businesses to grow and facilitate the production of goods
and services.
2. Give at least 5 investment tips for financial securities.
 Evaluate your comfort zone in taking on risk.
- Every investment entails some level of risk. If you want to invest in
securities such as stocks, bonds, or mutual funds, you should be aware
that you could lose part or all of your money.
 Be careful if investing heavily in shares of employer’s stock or any
individual stock.
 - Diversifying your investments is one of the most essential techniques
to reduce the risks of investing. Don't put all your eggs in one basket,
as common sense dictates.
 Avoid circumstances that can lead to fraud.
 View Savings Deposits as a Bill
- Saving money on a monthly basis can be difficult, especially when you
consider the numerous recurring expenses we all face, not to mention
the tempting consumer products that encourage us to spend our hard-
earned money.
 Start as Soon as You Can
- Although it is evident that saving begins at a young age, it is never too
late to begin—even if you are nearing retirement—because every cent
saved helps to cover your costs.

Sources:

Appleby, D. (2021). 10 Tips for Achieving Financial Security. Investopedia.

https://www.investopedia.com/articles/retirement/06/10secureretirementtips.asp

Federal Reserve Bank of San Francisco. (2005). How financial markets may affect economic

performance? Frbsf.Org.

https://www.frbsf.org/education/publications/doctor-econ/2005/january/financial-

markets-economic-performance/

Kishore, K. (2021). What is the importance of financial markets in an economy?

Https://Www.Kundankishore.In/. https://www.kundankishore.in/blog/what-is-the-

importance-of-financial-markets-in-an-economy

Security and Exchange Commission. (n.d.). Financial Navigating in the Current Economy: Ten

Things to Consider Before You Make Investing Decisions. Retrieved March 11, 2022,

from https://www.sec.gov/investor/pubs/tenthingstoconsider.htm