Capital Market is a market for securities. Securities include debt and equity. These are the places where both Corporations and the Govt can raise long-term funds. It is a place where money is provided for both long-term and short-term periods.
The market instruments which are exchanged are Corporate Equities; Agency Securities and Mortgages; Funds Shares; Corporate Bonds; Treasuries and Open Market; Municipal Securities.
Capital markets are of two types ‘primary market’ and ‘secondary markets’. Of the two types of markets, much significance is given to the secondary markets.
In primary markets, new stock or shares are sold to investors and/or general public. When the shares are bought by the investors, its called ‘underwriting’.
In secondary markets, existing shares and stock are bought and sold among investors or traders and stock-brokers. The securities traded include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. The initial offering of stocks and bonds to investors is done in the primary market and the subsequent trading is done in the secondary market.
The major players in the capital markets are
Households
Foreign investors
Corporations
Bankers
Insurers
Fund Managers
Government
Role of Capital Markets
Raising capital for business
Mobilizing savings for investment
Facilitating growth of corporations
Profit sharing
Corporate governance
Govt capital raising for development projects
A barometer to the economy
The major Stock Exchanges in the world are
New York Stock Exchange
Tokyo Stock Exchange
NASDAQ
Euronext
London Stock Exchange
Shanghai Stock Exchange
Hong Kong Stock Exchange
Toronto Stock Exchange
Frankfurt Stock Exchange
Madrid Stock Exchange
Bombay Stock Exchange
Australian Securities Exchange
Sao Paulo Stock Exchange
National Stock Exchange of India
Swiss Exchange
Nordic Stock Exchange
Milan Stock Exchange
Shenzhen Stock Exchange
Learn more about Capital Markets
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