Arguably, financial markets and securities have tremendous importance to the business. As a matter of fact, financial markets permits the selling and buying of resources in the business. Every business in the globe benefits from the events that take place in the financial markets, as well as the carrying out financial securities business. Financial markets and securities are important to business because it offers and regulates liquidly in the economy, which facilitates business growth. Without liquidly in business various activities will come to a standstill, this is because it slows down the expression of demand (Norton & Melicher, 2011).
Undeniably, financial markets are a place where individuals in business can trade financial securities. To every business financial securities utilizes the opportunities that develop in the financial markets, as well as putting extra cash in business into a good use. Perhaps, investing in bonds and stocks is an integral part to various strategies of management that the business sets. Financial markets and securities are also important to business because it develops a financially stable environment (Lasher, 2011). Moreover, financial markets and securities reinforce the investment motives that a business has established. There are situations where by business have no funds to trade with, in this case, financial markets and securities ensure that there is liquidity in the business that can be used for trade.
Financial markets and securities act as a regulating strategy to businesses. The selling and buying of financial securities facilitates a liquidity flow in the market. Hence, business at every given point will have some extra cash to invest and fund its operations. Therefore, financial market and securities are important to business since it facilitates a productive usage of funds (Norton & Melicher, 2011). Every business depends on the capital o run its activities, financial markets and securities facilitate capital formation in a business. Financial markets act as a channel, whereby new savings flow to assist in capital formation. In addition, financial markets and securities generate information required for the runni9ng of business (Lasher, 2011). In terms of risk, financial markets and securities transfer risks to various markets derivatives, of which the business would have incurred. Generally, financial markets and securities are important to business, since it promotes financial stability, spread risk, helps in capital formation, as well as creation of liquidity.
Lasher, W. (2011). Practical Financial Management 6th Edition. Cengage Learning.
Norton, E & Melicher, R. (2011). Introduction to Finance: Markets, Investment, and Financial
Management. London: Springer