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Financial Markets

Financial markets perform a crucial function in the financial system as facilitating organisations. Unlike financial they are not a source of funds but are a link and provide a forum in which suppliers of funds and demanded of loans/investments can transact business directly. While the loans and investments of financial intermediaries are made without the direct knowledge of the suppliers of funds (i.e. investors), suppliers in the financial market know where their funds are being lent/invested. The two key financial markets are the money market and the capital market.

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