Types of Financial Markets

          There are four types of financial markets--securities markets, mortgage markets, derivatives markets, and currency exchange markets. Most of us have some idea about the markets for securities. Securities Markets are physical locations or electronic forums where debt and equity securities are sold and traded. Debt securities are obligations to repay borrowed funds. Federal, state, and local governments can issue debt securities, while business corporations and financial institutions can issue both debt and equity securities. Equity securities are ownership rights in businesses and institutions. Corporations can raise funds either through a private placement that involves issuing new securities directly to specific investors or through a public offering that involves selling new securities to the general public.           There are primary and secondary markets for debt and equity securities. The initial offering of debt and equity securities to the public takes place in primary securities markets. Proceeds, after issuing costs, from the sale of new securities goes to the issuing business or government issuer. The primary markets is the only "markets" where the security issuer directly benefits (receive funds) from the sale of its securities.