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Answer to Question #3229 in Finance for fatma

Question #3229
What is finanical market and capital market and money market ?
What is Operational efficiency ?
What is allocational efficiency ?
Expert's answer
A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.
A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds.
The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames.
Operational efficiency
It is a market condition that exists when participants can execute transactions and receive services at a price that equates fairly to the actual costs required to provide them. An operationally-efficient market allows investors to make transactions that move the market further toward the overall goal of prudent capital allocation, without being chiseled down by excessive frictional costs, which would reduce the risk/reward profile of the transaction.
Allocational efficiency
It is a characteristic of an efficient market in which capital is allocated in a way that benefits all participants. Allocational efficiency occurs when organizations in the public and private sectors can obtain funding for the projects that will be the most profitable, thereby promoting economic growth.

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