Explain the interaction of the 4 financial market participants

Assume that you are encouraging your friend to invest his idle cash in the stock market, how will you explain to him in simpler terms the different stock market transaction

 

Explain the interaction of the 4 financial market participants

Types of financial markets include the following;

Stock market, Bon market, Commodities Market and Derivatives market.

Stock market is a market of a series of exchanges where successful corporations go to raise large amounts of cash to expand.

Bond market, This where organizations go raise large amount of loans.

Commodities market, this is a market where companies offset their futures risks when buying or selling natural resources.

Derivatives market, this the market where financial products that base their value on underlying assets are used to maximize potential gains by sophisticated investors.

 Assume that you are encouraging your friend to invest his idle cash in the stock market, how will you explain to him in simpler terms the different stock market transaction

Stock market is where shares of public listed companies are traded.

Types of stock in the market are; growth stocks, yield stocks, new issues, defensive and picking stocks.

Growth stocks are purchased for capital growth and not necessarily dividends. This are shares in those companies that are generating huge positive cashflows and its earnings expected to grow at an above average rate in the market.

Dividend aka yield stock, this are stocks that perform well in bull markets while providing partial downside protection for investors in bear market.

Defensive stocks, These are shares that don't go down so much when times are tough because the sell consumer staples.

Strategy or stock picking, its fun as rousing on the wins as its deflating on the losses.