An analysis of risk that are run by the financial markets

This paper deals with the analysis of risk that is run by the financial markets. Firstly we need to understand what a financial market is. Financial market is a broad term which describes a market place where people trade their financial securities including bonds, currencies and equities, and precious metals and agricultural products. It also includes commodities, and other fungible items of value at very low transaction cost and also at prices that affect the supply and demand. The status of the financial market depends upon the transaction of trade on the basis of which financial market can be classified as small depending upon low activity and big which trades in billions, trillions etc. for example small financial market can be of an individual person with low capital, securities or investment whereas the example for large market if foreign exchange market. In a financial market lot of risks are involved. The risks mostly relate to the inflation and deflation in the asset value in a market. The risk may range between minimum losses to a maximum loss depending upon the type of risk involved. Thus to sum up, the financial risk in a market is always not stable and it fluctuates often which decides the risk factor in a financial market. One has to bear in mind that sometimes, inflation of the asset value in the financial market may benefit some businessman and on the other hand the same inflation on the asset value may be of disadvantage to another businessman. So also is the deflation rate and vice-versa. The financial market also depends upon the partnership in a company, the buyer, the seller, the customer / client and also the person who is involved in the contract of supply of goods or products. If the trade between the entire above are not smooth and if there is a shortfall or changeover of any one of the above, it would normally cause a setback in the financial market and thereby it is a risk, as every time one has to expect the unexpected in a financial market. On the whole, a careful observation and study of the types of risks involved in a financial market, would enable a person to invest better in the market for capital gains.