A financial market is a market for the creation of new securities and sale or exchange of existing financial assets.
Functions of Financial Market:
(i) It performs the allocative function by mobilising savings and channelling them into the most beneficial avenues.
(ii) It assists in determining the price for the financial asset in a certain financial market through the market forces of demand and supply.
(iii) It gives liquidity to the financial assets by giving ready markets wherein the securities can be easily converted into cash or vice versa.
(iv) It provides a market for the exchange of securities, thereby reducing the cost of transactions by saving money, time and effort spend on the buyers and sellers in locating a common platform for each other.