What are Financial Markets ?

What is a Financial Market? What does banks do? How do they Sustain? How do they earn?

To answer the above, we need to understand that Financial Markets are for people who has surplus money and want the money to be invested. The financial markets are for people who has less money and want help from the bank. The financial markets helps in managing the risk.

So based on the above explanation, Financial Markets are divided into three parts:

1. Investment: Financial institutions matches people who need money with people who have abundance of money.

2. Risk management: Financial institutions enable participants hedge or control their exposes.

3. Transactional: Financial institutions helps to transfer money from one account to another account or from buyer to seller