← Back to Glossary
Financial Market
Definition
A financial market is where buyers and sellers trade assets like stocks, bonds, currencies, and derivatives, providing liquidity and price discovery.
Explanation
Types of financial markets include stock markets (NYSE, NASDAQ), bond markets, forex markets, commodities markets, and derivatives markets. Markets serve to allocate capital efficiently, determine prices through supply and demand, and provide investment opportunities.
Market performance is measured by indices like the S&P 500, Dow Jones, and NASDAQ. Understanding market cycles and long-term trends helps investors make informed decisions.
Example
The S&P 500 index tracks 500 large US companies and has historically averaged about 10% annual returns over long periods.