Financial Markets - Assignment Example

oney markets which entail bond markets and stock markets, money markets, commodity markets, insurance markets among others (Bhole & Mahakud 2009, p.2). The financial market is crucial for the success of the businesses encompassed in a given economy. Every business utilizes specific financial instruments in their operations. The document below analyzes 1 PM PLC, a British company on the basis of its financial aspects. Numerous financial markets have cropped up in the modern world of business. The financial instruments that are in existence in the common modern markets can be broadly classified into equity and debt based financial instruments.

The debt-based financial instruments represent loans made by a given investor to the asset’s owner. In others words, it entails the businesses borrowing money from financial institutions. It has some benefits to the investors as well as disadvantages. The most significant benefit of the debt based financial instruments is that unlike the equity-based financial instruments, the entrepreneur retains the sole control of the enterprise (Howells & Bain 2007, p.5). This implies that the investors will be entitled to share profits and also have the say run the business towards their direction of choice.

When the entrepreneur is need of the cash, acquiring the cash do not seem a problem. However, it can sometimes lead to conflict somewhere along the way since it has to be repaid as per the laid down terms and conditions. Foreign exchange is another type of financial instrument being utilized in the modern business. However, this has limitation to the businesses which transact businesses internationally. The most prominent financial instrument in the world today is the equity market or the stock market.

Most of the companies and enterprises are making use of this market to serve their financial needs. It can be defined as an aggregation of buyers as well as sellers of stocks also termed as shares (Bhole & Mahakud 2009, p.3). They