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The market where investment instruments like bonds, equities and mortgages 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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CAPITALMARKETCAPITAL MARKET Themarket where investmentinstruments like bonds, equitiesand mortgages are traded isknown as the 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 long termand overnight funds. The different types of financial instrumentsthat are traded in the capital markets are:> equity instruments> credit market instruments,> insurance instruments,> foreign exchange instruments,> hybrid instruments and> derivative instruments.Nature of capital marketThe nature of capital market is broughtout by the following facts: It Has Two Segments It Deals In Long-Term Securities It Performs Trade-off Function It Creates Dispersion In BusinessOwnership 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.In this 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

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