Financial markets have a significant impact on businesses in various ways:
Access to Capital: Through stock and bond markets, businesses can raise the necessary funds for expansion, research, and development. Valuation: The performance of a company's stock in the market often reflects its valuation and investor confidence. Mergers and Acquisitions: Financial markets facilitate mergers and acquisitions by providing a platform for the buying and selling of company shares. Risk Management: Businesses can use derivatives to hedge against risks like currency fluctuations, interest rate changes, and commodity price volatility. Corporate Governance: Publicly traded companies are often subject to more stringent regulatory requirements and scrutiny, leading to better corporate governance.