Cash Market
The cash market is a financial market where securities are bought and sold for cash, rather than on credit. It is also known as the spot market, spot exchange, or physical market. Cash markets are used to trade commodities, currencies, and other financial instruments. The cash market is different from the derivatives market, which trades futures and options contracts.
History of the Cash Market
The cash market has been around since the beginning of financial markets. It is the oldest and most basic form of trading, and it is still used today. The cash market is used to trade commodities, currencies, and other financial instruments. It is also used to trade stocks, bonds, and other securities. The cash market is different from the derivatives market, which trades futures and options contracts.
The cash market is an important part of the global financial system. It is used to facilitate the transfer of funds between buyers and sellers. It is also used to provide liquidity to the markets. The cash market is used by investors to buy and sell securities quickly and efficiently. It is also used by companies to raise capital and by governments to finance their operations.
Comparison of Cash Market and Derivatives Market
| Cash Market | Derivatives Market |
|---|---|
| Trades securities for cash | Trades futures and options contracts |
| Used to facilitate the transfer of funds | Used to hedge risk |
| Used to provide liquidity to the markets | Used to speculate on price movements |
Summary
The cash market is a financial market where securities are bought and sold for cash, rather than on credit. It is also known as the spot market, spot exchange, or physical market. The cash market is used to trade commodities, currencies, and other financial instruments. It is an important part of the global financial system and is used to facilitate the transfer of funds between buyers and sellers. For more information about the cash market, visit websites such as Investopedia and The Balance.
See Also
- Derivatives Market
- Commodities Market
- Currency Market
- Stock Market
- Bond Market
- Futures Market
- Options Market
- Spot Exchange
- Physical Market
- Liquidity
