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Question What is a financial market Explain nature of financial markets and who the major participants are What is the role of ASX in financial markets Outline the implication of overseas and domestic market influences on Australian business financial needs Response Financial Markets Financial Markets are made up of the individuals institutions and systems supplying excess funds to those who require them The term financial relates to money and market indicates trading activity Financial markets provide businesses with Access to funds Investment opportunities and contact in managing funds Expertise in financial market dealings Types of Financial Markets There are two main types of Financial Markets 1Exchange traded markets are those traded on an authorized exchange such as the Australian Stock Exchange ASX or the Sydney Futures Exchange SFE 2Over-the-counter markets OTC are not traded on an exchange but transactions take place via telephone and other means of communication OTCs are not put through the rigor that Exchange trade markets are which allows them to adapt to the needs of borrowers and investors There are four sections the OTCs Cash and securities markets are made up of short and long term market instruments that generally have a fixed interest rate or yield Corporate bonds Junk bonds Eurobonds and unsecured notes are all examples of instruments used in the Cash and securities markets Foreign Exchange markets involves the buying and selling of currencies with Australia and overseas Usually used when businesses are purchasing foreign goods from overseas Commodity Markets are used to protect against the changes in commodity prices which businesses produce or purchase Examples of commodities traded include minerals fuel and electricity Derivatives markets were developed to provide flexibility for business needs They involve a number of financial instruments that can be interchanged and altered to suit a business The Major Participants in Financial Markets Banks - Banks are
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