Market: Meaning, Features, Examples & Types Of Market And People Involved In Commodity Market

Meaning Of Market

A market can be defined as any place at a point of time, where buyers and sellers meet for the exchange or buying and selling of goods and services. Anywhere can be a market. However, we have what we call Market Place, where buyers and sellers meet for the purpose of exchange, buying and selling of goods and services.

Market can be specialized and in line with items of Trade. For example: Vegetable Market, City Market, Cray-fish Market,Car Market, etc.

FEATURES OF A MARKET

1. A market has many buyers and sellers.

2. It has free entrance and free exit.

3. People makes their own decisions.

4. People have right to choose their own goods.

5. There are variety of goods and services.

6. People have right to charge their own prices.

7. Goods and Services are exchanged freely.

8. There is competition among sellers.

9. People have right to adequate compensation, right to value of their money.

10. A place where fake and substandard products are discovered.

11. Bidders interact and make deals.

TYPES OF MARKET

Markets are grouped according to the goods and services sold in them. There are several types of market, But on this article we shall limit our knowledge to only three types, Which are: Capital Market, Money Market and Commodity Market.

(1) Capital Market: This type of market is designed to finance long term investment by businesses, government and households.

Institutions Involved In The Capital Market are:

a). The central Bank

b). Development Banks

c). Building Societies

d). National Provident Fund (NPF)

e). Insurance Companies

f). The Stock Exchange

Instruments Traded In The Capital Market:

  1. Debt Instruments
  2. Equities (Also known as common stock)
  3. Preference Shares

(2) Money Market: This market is designed for the making of short term loans. It aids all forms of business transactions. It finances the working capital needs of business organisation and provides governments with short term funds, instead of tax collections. It gives loans that mature within one year or less than one year. A lot of financial institutions involved in this type of market, purchase and sell funds on short term basis.

Institutions Involved In The Money Market are:

a). The Central Bank

b). Commercial Banks

c). Discount Houses

d). Acceptance Houses

e). Finance Houses

f). Insurance Companies

Instruments Traded In The Money Market

  1. Certificate Of Deposits
  2. Repurchase Agreements
  3. Commercial Paper
  4. Treasury Bill
  5. Money Funds

(3) Commodity Market: This is an international market in which dealers from all over the world buy and sell commodities through telephone, and telex links, as well as by direct contact. This market deals mainly in raw or primary products. The raw commodities are traded on regulated commodities exchanges in which they are bought and sold in standardized contracts. It covers physical products (like Foods, metals, electricity markets) But not in the ways that services including those of governments, nor investment , nor debt, can be seen as commodity.

Institutions Involved In Commodity Market Are:

a). International Monetary Fund

b). World Bank

c). World Trade Organization (WTO)

d). The Private Sector

e). Government Institutions

Instruments Traded In Commodity Market

    Agricultural Products

    Livestock And Meat

    Energy (crude oil, ethanol etc.)

    Precious Metals

    Industrial Metals