CASH MARKET Meaning and
Definition
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The cash market is a segment of the financial market where financial instruments, such as stocks, bonds, currencies, and commodities, are bought and sold for immediate delivery and payment. It is also known as the spot market or the physical market. In the cash market, transactions are settled in cash on the spot, meaning the buyer pays the seller immediately and takes possession of the underlying asset.
Unlike derivative markets, where contracts are based on future prices and delivery dates, the cash market involves the direct exchange of assets for cash. This market plays a crucial role in providing liquidity and facilitating economic activities, as it allows individuals and businesses to buy and sell assets easily and quickly. The cash market is primarily driven by supply and demand dynamics, with prices reflecting current market conditions and investor sentiment.
In the stock market, for example, the cash market refers to the purchase or sale of actual shares of a company's stock, as opposed to trading in futures contracts or options. Similarly, in the foreign exchange market, the cash market involves the immediate exchange of one currency for another at the current exchange rate.
Overall, the cash market is a fundamental component of the global financial system, providing individuals and institutions with a platform to trade and invest in various financial assets on a direct, immediate, and cash basis.
Common Misspellings for CASH MARKET
- xash market
- vash market
- fash market
- dash market
- czsh market
- cssh market
- cwsh market
- cqsh market
- caah market
- cazh market
- caxh market
- cadh market
- caeh market
- cawh market
- casg market
- casb market
- casn market
- casj market
- casu market
- casy market
Etymology of CASH MARKET
The word "cash" is derived from the Middle French word "caisse" or the Italian word "cassa", both of which meant "money box" or "chest". The term "market" comes from the Latin word "mercatum", which means "open space for buying and selling".
Combining these two words, "cash market" refers to a financial market where transactions are settled immediately with cash, rather than through a future delivery or using credit. The term is often used in contrast to "futures markets" or "derivatives markets", where contracts to buy or sell an asset are made for future delivery or settlement.
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