Knowledge of Financial Markets Essay

In the contemporary business environment, financial markets play extremely important role. The recent economic recession and previous economic crises reveal the full extent to which financial markets can affect the economic development and the life of individuals. At the same time, financial markets open wide opportunities for individuals and companies. The experience of such outstanding financiers, such as G. Soros, proves large opportunities for individual and organizational success in financial markets. At this point, it is important to place emphasis on the fact that financial markets comprise an integral part of the contemporary economy and they provide ample opportunities for substantial financial earnings and fast business development but, on the other hand, they are vulnerable to considerable risks and threats, which can undermine the organizational development and provoke financial and economic crises.
In order to understand functioning and role of financial markets, it is important to dwell upon the definition of financial markets. In broad terms, financial markets are marketplaces, where buyers and sellers participate in the trade of assets such as equities, bonds, currencies, and derivatives (Groz, 2009). As a rule, financial markets have transparent prices and some basic rules and regulations of trade, which are simple and comprehensible to all participants of the trade (Pilbeam, 2010). In such a way, financial markets encourages the enrollment of possibly larger number of buyers and sellers.
Furthermore, many organizations use financial markets to attract new investments and to raise funds for their projects. In such a situation, they just go public to attract additional funds and to raise funds for their projects. At the same time, financial markets often fail to mirror the actual position of organizations in the market. In this regard, it is possible to refer to notorious case of Enron and other financial scandals which shatter financial markets and influenceв the situation in economy at large.
Moreover, financial markets are vulnerable to speculations. At this point, it is possible to refer to the recent problem in the housing market, when the housing market bubble provoked a profound economic recession, which was enhanced by the galloping oil price, which, in their turn, were also provoked by speculations on the financial market relate to the oil price. In such a way, financial markets comprise an integral part of the contemporary economy but their impact on the economic development is not always positive. Instead, they may provoke economic crises and slow down the economic development.
In fact, financial markets can affect individuals as well. For instance, I in person attempted to participate in share trades to acquire some experience of working in financial markets revealed the full extent to which financial markets are deceitful. To put it more precisely, at first, I haveу managed to double my investments but in the course of a couple of weeks I was close to lose everything. Fortunately, I could end up my experiment of financial trading with 15% profit, which was a plausible return on investments for me.
Thus, taking into account all above mentioned, it is important to place emphasis on the fact that financial markets affect consistently the economic development. They open wide opportunities for business development but they can provoke ruins and economic crises.