EconoTerms F

Financial Market
A financial market is a market that trades legal claims on assets. For instance, if you purchase a stock, you're not getting any real, tangible asset, but you are getting a legal claim on the profits of a business. Stock markets, bond markets, and the "open market" (which trades government securities) are all financial markets, as are futures markets and options markets. Also, any transaction you carry out with a bank can be viewed as part of the financial market, as is insurance. Financial markets allow the average person to invest small amounts of money, so that businesses can borrow large amounts of money to use for capital.

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