How to understand the function of financial market

Functional understanding of financial markets

Methods/Steps 1 First, tell us about the main functions of the financial market. 1. Capital accumulation. Resource allocation three. Adjust the economy. Reflect the economy

2. Capital Accumulation For this function, the financial market has gathered a lot of scattered small funds (that is, some spare money or funds in everyone's hands). If there is no financial market, everyone's money is idle, but with this market, many people's money is concentrated and invested in social reproduction.

Second, resource allocation Resource allocation means that everyone's money was not used well before. Now that there is a market, these funds will be used efficiently and risks will be redistributed.

3. Adjust the economic and financial markets to connect two ends, one is investors and the other is depositors. The market has a certain influence on them, thus adjusting the macro-economy. This function should be the easiest to understand.

Fourthly, reflecting the economy, because most of the securities transactions are conducted in the stock exchange, we understand the market through this tangible market and finally decide to invest. At the same time, this market gives a lot of data and information, through which we can understand the economy. In other words, it reflects the economy, let us know.