Financial Markets and the Risks They Run :: Financial Markets Institutions Finances Essays

Financial Markets and the Risks They RunOutline the differences between a negotiate and a bargainer (ormarketmaker) in pecuniary markets, including discussions of how theyare remunerated and what risks they run.A financial market consists of diverse financial summations traded between purchasers and sellers. In humanitarian to enabling exchange of previouslyissued financial assets, financial markets make realisticizable the borrowingand lending by facilitating the sale by newly issued financial assets.Examples of financial markets include the New York Stock Exchange(which is involved in the resale of previously issued stock shares),the U.S. government bond market (which is involved in the resale ofpreviously issued bonds), and the U.S. Treasury bills auction (salesof newly issued T-bills). A financial psychiatric hospital is an organizationwhose primary source of profits is through financial assettransactions. Examples of such financial institutions include discountbrokers, banks, insurance companies, and complex multi-functionfinancial institutions such as Merrill Lynch.Financial institutions participate in financial markets by creatingand/or exchange of financial assets. In the financial market in that location arefour institutions that carry out in this type of trade. ace of whichis a broker which is a commissioned agent of a buyer/seller whofacilitates trade by locating a seller/buyer to complete the desiredtransaction. A broker does not take a position in the assets he or shetrades there is no maintaining of inventories in these assets onbehalf of the broker. The commissions they charge to the users oftheir services determine the profits of brokers. Examples of brokersinclude real estate brokers and stockbrokers. Dealers, like brokers, facilitate trade by matching buyers withsellers of assets they do not engage in asset transformation. Unlikebrokers, however, a dealer can and does take positions (i.e.,maintain inventories) in the a ssets he or she trades that sanction thedealer to sell out of inventory rather than always having to fixsellers to match every offer to buy. Also, unlike brokers, dealers donot gain vigor sales commissions.