What are the 5 Roles of Financial Markets?

By Balaji

Updated on: February 17th, 2023

The 5 roles of financial markets are to ensure low transaction and information costs, to provide liquidity by providing a mechanism for the investor to sell financial assets, to provide certainty in the trading of financial assets, and to provide a facility for interaction between investors and borrowers. A financial market is a market where individuals can exchange financial derivatives and securities for little to no cost.

Table of content

1. 5 Roles of Financial Markets
2. What are the 5 Roles of Financial Markets?

5 Roles of Financial Markets

Stocks, bonds, raw materials, and precious metals, which are referred to as commodities on the financial markets, are some of the securities. They also provide price information resulting from the interaction between buyers and sellers in the market as they trade financial assets.

Financial markets provide a framework where different participants, such as investors and creditors, are treated fairly and equitably, regardless of the size of their businesses. or other factors.
The financial industry also provides various employment opportunities, which helps reduce the unemployment rate in the country.
Like other financial markets, the real estate market is a financial market because funds are provided for purchasing and selling physical real estate.
The financial market plays a vital role in the economy of any country.
It provides a framework that allows various participants, such as investors and creditors, companies and traders, to trade fairly, regardless of the size of their business or other factors.

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