Financial market refers to a market in which financial instruments are merchandized. The financial markets include stock exchanges, product exchanges, foreign exchange market and bond markets. Financial markets are markets for exchange of capital and credit inclusive of money markets and capital markets.
Money is put into a number of uses. It is put in banks to accumulate interest without the owner having to work. The money is used by the bank to offer loan to those in need. The money is used in different ways that may include doing investments, buying a home and schooling among many others. When banks have given out the money, they use money banked by account holders. The money given as loan is returned with an interest for the bank. The money may be used to buy bonds from a company. Buying of bonds is considered to be loans. Buying of stocks is regarded as buying a section of the company. The company therefore uses money to grow, recruit more employees, make advertisements and in the production of new products.
In the United Arab Emirates, financial markets include Dubai financial market, Abu Dhabi financial market, NASDAQ Dubai, Dubai Gold, Dubai international financial exchange and Commodities exchange (DGCX). In order to get a broader understanding of financial markets it is wise to look at one of the markets in detail. The Dubai financial market is a stock exchange situated in United Arab Emirates (S%u0323abri%u0304 2008). The market was started in March 26 the year 2000. DFM has about fifty-seven listed on its name. The aggregate market of DFM stands at $360 billion.
A financial instrument refers to an asset that can be traded upon. A financial instrument can be of any form, either cash, contractual mandate to receive, prove of ownership gain in an entity. A financial instrument can also be defined as any contract that yields to a financial asset of one party and a financial equity of another party. Financial instruments can be grouped in any form depending on whether they are cash instruments or derivative instruments (Germidis & Michale 1984).
Cash instruments are those financial instruments that can be valued directly by the market. These instruments can be subdivided into securities that can be transferred readily and other instruments like deposits and loans. In deposits and loans both parties that are the borrower and lender have to make an agreement about the transfer. Derivative instruments refer to those instruments that derive their value and characteristics of entities like an asset or interest rates. Derivative instruments can be divided into over counter or exchange-traded derivatives.
There are various financial instruments in the United Arab Emirates. Real estate is one of them, and it constitutes the land and permanent structures on it. The structures on that land are immovable; hence if the structures are moved they suffer damage and alteration. The popular categories of real estates and real estate interests that security can be given include freehold land. Additionally, buildings and construction erected on the freehold land and many other related assets.
The financial markets in the United Arab Emirates cover business mortgage as a financial instrument. A business mortgage refers to a mortgage of movable assets of an entity. A business mortgage covers all the company’s tangible property. Tangible property includes goods, stores, tools and the company’s machinery. It also covers all of the company’s property that is not physical but can be moved. Intangible but movable property comprises of contract rights, license rights, trade name and other assets (Jeffreys 2011). Mortgaged assets must be defined in deeper detail as possible, failure to be described in detail there are only intangible property that is seen to be a mortgage. The three include trade name, contract rights and finally goodwill.