What is a financial market? From Investopedia “A financial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies, and derivatives.” (Investopedia, 2018, pg. 1) Individual or firms sign a contract to sell or buy products or good. There multiple types of financial markets. Each market serves different customers and purposes. Spot markets, future markets, money markets, capital markets, etc. These are just some types of different markets. Capital and Money markets use instruments contracts between two parties. Such as bonds, common stocks, shares, money, and treasury bills. Financial markets are important to the economy and helping it grow. Physical assets market and financial markets are two types of markets. Physical markets are tangible asset markets. Examples of physical markets are auto, wheat, real estate, or computers. Financial markets deal with stocks, bonds, loans, notes, and mortgages. When customers purchase an asset and it will typically arrive in a few days is an on the spot market. “Purchases are paid for in cash at current prices set by the market, rather than the price at the time of delivery.” (Market Business News, 2018, pg.1) Example of spot market is when crude oil is sold by the barrel. Customers buy the oil at the price they purchase it at not the delivery price. Future market when customers agree to buy or sell assets at a future date. An example of future market is selling grain or corn. Customers agree to purchase and wait until the growing season is over to get their purchase. When customers borrow or are loaned funds for less than one year this is a money market. There are three types of terms with tells how long you have until you must pay them back. Short-term is less than 1 year, intermediate-term is between 1-10, and long-term is more than 10 years. Banks can loan money to customers if they are eligible for them which is an example of the money market. U.S Treasury bills are also an example of the money market. Other examples of money market are commercial paper, negotiable certificates of deposits, consumer credit, money market mutual funds. A capital market is a long-term debt which is over a year. The New York Stock Exchange is the largest trade and buys of stocks is an example of a capital market. Mortgages are also an example of a capital market. Mortgages can be loaned out for 30 years. State and local government bonds are another examples of a capital market. Corporate bonds, leases, common stocks, and preferred stocks are also examples of capital market. Primary and Secondary is part of the capital market. A primary market is markets when corporations raise new capital. The primary market is the first issuing new tradable assets. Then the secondary market is marketing tradable assets are already in place for investors. In the secondary market only, basic forces like supply and demand determine the price of the security. (Investopedia, 2018, pg. 1) Private markets are markets that have two parties and it where a transaction takes place between them. “Bank loans and private debt placements with insurance companies are examples of private market transactions.” (Brigham & Houston, 2015, pg.29) Public markets are markets in which contracts are traded on an exchanged. Corporate bonds and common stocks are examples of a public market. In conclusion, financial markets serve different meaning and purposes. Money and capital are the two major financial markets. Why are financial markets important? According to Dr. Econ “Financial markets help to efficiently direct the flow of savings and investment in the economy in ways that facilitate the accumulation of capital and the production of goods and services.” (Econ, 2005, pg. 1) Financial markets are important to help us collect revenue and help the economy grow. Instruments are important also because they are used as the contract between each party. Understanding the financial markets better will help us understand the instruments or contracts such as a loan, mortgages, stock. Which is important when growing or being an adult.