Financial business is one of the most profitable and attractive fields of business. This consists of buying and selling foreign currency, shares, and bonds. Transactions take place both in the territory of the particular state and internationally.
The peculiarity of entrepreneurial activity in the financial sphere is the possibility to use the circulation of intellectual property, work, and services.
Participants in financial business are such types of organizations as:
- banking companies;
- currency and stock exchanges;
- investment funds;
- insurance companies.
Each of these players has unique features. Nevertheless, high profit, high risk, and computerization unite them all. More and more people are involved in the financial business.
For example, in the United States, participation in stock exchanges involved up to 45% of the population, while in the Russian Federation, the number of participants reached three thousand people. In this article, we would like to describe the features of the activities of some financial business participants.
Stock exchange activity
Stock exchanges distribute securities and create the conditions for their turnover. Experts conduct transactions on stock exchanges only when there is proper transparency and compliance with the exchange and trading rules. The main participants are brokers.
Their task is to track the price to buy shares at the best price. Brokers are representatives of companies on stock exchanges that help companies stay afloat and attract customers.
However, there are states in which some factors are essential, such as the issuance of government securities and the development of credit and financial institutions. There, the role of stock exchanges becomes less critical. Among such countries is the USA.
The bank is engaged in issuing loans, opening deposits, and making payments on behalf of clients. Most of the revenue consists of interest from loans and deposits. There are three types of banking activities:
- Active, which involves the placement of money. The bank is a lender and accepts deposits that are in circulation. The fact is that the bank acts as a depositor for other entities too.
- Passive includes attracting money with the help of shareholders and depositors. In other words, it is such a tool as advertising.
- Intermediary consists of making payments, transfers, and currency exchanges on behalf of clients. Each bank receives a fee in the form of a commission for such activities.
If the entrepreneur plans to engage in banking activities, he should get more than just knowledge. It should have a cash cushion as this activity can bring the entrepreneur risks and even losses, such as unpaid credit. In addition, entrepreneurs should be licensed to operate banks. Many banks also gain control of their financial activities from the state.
An organization, such as a currency exchange, purchases, sells or trades currency with local money. Members of such an organization are commercial banks and joint-stock companies engaged in the sale of shares and currency values. Participants in the currency market are divided into two types:
- active ones that set currency prices for banks;
- passive ones that need to conduct currency transactions.
Task currency exchanges are the tracking of all changes in the exchange rate, as well as the collecting or analysis of other information about currency transactions and the establishment of the current exchange rate.
You can see that the financial business field has strengths such as profitability. However, such activities are based on risk, so you should anticipate possible decline and the probability of multi-million dollar losses in detail.