capital_market22__21

May 19th, 2015
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The market where investment instruments like bonds and equities are traded is known as the capital market. The primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit.

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CAPITALMARKETCAPITALMARKET Themarket where investmentinstruments like bonds andequities are traded is known asthe capital market. The primal role of this market is tomake investment from investorswho have surplus funds to theones who are running a deficit.The capital market offers both longterm and overnight funds. Thedifferent types of financialinstruments that are traded in thecapital markets are:> equity instruments> insurance instruments,> foreign exchange instruments,> hybrid instrumentsNATURE OF CAPITAL MARKETThe nature of capital market is brought out by thefollowing facts: It Has Two Segments It Deals In Long-Term Securities It Performs Trade-off Function It Creates Dispersion In Business Ownership It Helps In Capital Formation It Helps In Creating LiquidityTYPES OF CAPITAL MARKETThere are two types of capitalmarket: Primary market, Secondary marketPRIMARY MARKETIt is that market in whichshares, debentures and othersecurities are sold for the firsttime for collecting long-termcapital.This market is concerned withnew issues. Therefore, theprimary market is also calledNEW ISSUE MARKET. Inthis market, the flow of funds isfrom savers to borrowers (industries),hence, it helps directly in the capitalformation of the country. The money collected from thismarket is generally used by thecompanies to modernize the plant,machinery and buildings, forextendi

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