The Stock Market and Financial Markets

The stock market is the financial market by excellence. To begin the study of this market, in this section we take a look in an introductory way in their general procedures. That is why, we will show their goals, procedures and history. Likewise, we will note the advantages and disadvantages the stock market provides the entities that need funding and the investors.

To carry out a buying or selling of financial assets, such as money, stocks and duties we need these markets to exist. There are 4 main types of financial markets, depending on the assets being traded:

Monetary Markets: In these are traded short term financial assets such as inter-banks deposits, Treasury bonds and promissory notes from companies. This is also called money-market.

Market of Capitals: In these, stocks, duties and bonds are traded. In Spain there are many markets of capital among which, we can highlight the stock markets, the secondary stock markets of middle-sized companies, the private fixed-income market from the Financial Assets Brokers Association (FABA) in which private duties, bonds, companies´ promissory notes, certificates, mortgaged bonds and participations are traded; besides the denominated “matador” bonds (bonds issued in Euros by foreign companies).

Derivative Products Market: In these, futures and options are negotiated.

Currency Market: Instruments in varied currency are traded in this market. The most important is the buying and selling of currency in cash or installments.

As indicated, the stock market is one of the market of capitals. It consists in an organized financial market in which professionals get together periodically to buy and sell public and or private values.

The basic features of this market are:

• It’s a public market where securities are traded.
• Only securities of those entities that have been admitted to be quoted are negotiated.
• Transactions are legally and economically insured. This, as a consequence of the existing regulations that guarantees stock market operations and the values quality.

In the stock market many physical and legal person are involved:

Capital applicants: public institutions (State, Autonomous communities, city halls, delegations, public enterprises, etc.) and private companies to get part of the funding they need.