Dr. Zulfiqar Hasan

Financial Environment

A financial environment is a part of an economy with the major players being firms, investors, and markets.

Financial environment includes bond markets, forex markets, stock markets, commodity markets, OTC markets, Real estate markets and cash or spot markets etc.

Components of Financial Environment

The financial environment is composed of three key components:
01. financial managers,

02. financial markets, and

03. investors (including creditors

Essentially, this sector can represent a large part of a well-developed economy as individuals who retain private property have the ability to grow their capital. Firms are any business that offer goods or services to consumers.

Investors are individuals or businesses that place capital into businesses for financial returns.  Markets represent the financial environment that makes this all possible.

Financial Markets & Its Types

A financial market is a market in which financial assets such as stocks and bonds can be purchased or sold. ( Jeff Madura)
Financial markets are mechanisms by which borrowers and lenders get together.

It is a system comprised of individuals and institutions, instruments, and procedures that bring together borrowers and savers, no matter the location. (Besely & Brigham)

  1. Debt versus equity markets
  2. Money versus capital markets

  3. Primary versus secondary markets
  4. Public versus private markets

  5. Spot versus future markets
  6. World, national, regional, and local markets

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