Monday, December 17, 2007

Financial market

In economics, a financial market is a mechanism that allows people to simply buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as valuable metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that imitate the proficient market suggestion.

Financial markets have evolved significantly over several hundred years and are undergoing constant modernization to improve liquidity.

Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) survive. Markets work by placing many interested sellers in one "place", thus making them easier to locate for potential buyers. An economy which relies primarily on connections between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy that is based, such as a gift economy.

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