What is Capital Market - Financial Market

Capital Market is a type of market in which financial products like equity and debt are bought and sold. A capital market can be a primary market or secondary market. In which primary market, new stocks, and bond issues for the first time and in the secondary market the issued stocks and bonds trade between one person to another. Capital Market helps to raise money for long-term investment, one of the first decisions is whether to by issuing bonds or shares. A new issue of shares will decrease the ownership rights of the existing shareholders, from an investor’s points of view, shares offer higher returns and capital gain if the company does well. On the other hand, bonds are safer even if the company does poorly, as they are less risky and in the event of bankruptcy, the bond owner may be paid something, while shareholders will receive nothing. Keeping in view the secondary market, most of the capital market transactions take place on the secondary market. On the primary market each security can be sold only once, and on the secondary market there is no limit to the number of times security can be traded.


TYPES OF CAPITAL MARKET

1. Primary Market: In which primary market, new stocks, and bond issues for the first time.


2. Secondary Market: In the secondary market the issued stocks and bonds trade between one person to another.


INSTRUMENTS OF CAPITAL MARKET

1. STOCKS

Stocks are shares traded on stock exchange. Buyers of the shares are called share holders.


2. BONDS

Bonds are debt market instrument that are traded in the capital market. Bonds are issue to raise capital for business, business raise money with cheaper rates than banks. The bond issuer pay interest with principal at the end of duration.

 



FUNCTIONS OF CAPITAL MARKET

1. Boost economic growth

2. It help business to raise money for their expansions

3. It gives opportunities to ordinary people to be a part of company as shareholder

4. Lining investors and business

5. Trading of securities

6. Valuation of financial instruments

7. Capital allocation

8. Availability of funds


CAPITAL MARKET OF INDIA

1. Government Securities

2. Industrial Securities

  • New Issue (IPO in primary market)
  • Old Issue Market (Trading On Stock Exchange)
3. Development Financial Institutions (DFIs)
  • IFCI
  • ICICI
  • SFCs
  • IDBI
  • IIBI
  • UTI
4. Financial Intermediaries
  • Merchant bank
  • Mutual Funds
  • Leasing Companies
  • Venture Capital Companies
  • Other Financial Organization
IMPORTANCE OF CAPITAL MARKET
1. Help firms and governments raise cash by selling securities
2. Funds to invest and earn a reurn
3. Help lower the cost of exchange
4. Mobilization of Savings
5. Sustainable economic growth


Financial Market is a market in which people trade financial securities like derivatives, stocks, bonds, commodities, etc. financial markets refer to the markets that are used to raise finance. Capital Market refers to long term finance and money markets refer to short term finance. There are some of the financial securities trade in the market as below:- 


  1. Stock market (capital market)
  2. The bond market (capital market)
  3. Commodity markets
  4. Money markets (debt market)
  5. Derivatives market
  6. Future market
  7. Foreign exchange markets
  8. Cryptocurrency market
  9. Spot market
  10. Inter-bank lending market



Financial Regulation is a regulation or regulatory authority to particular requirements, restrictions, and guidelines, to maintain the stability and integrity of the financial market. Regulations are aims to maintain confidence in the financial system, financial stability, consumer protection.


Stock Exchange is a platform where traders can buy and sell securities like shares of stock and bonds and other financial instruments. An exchange may also provide facilities for the issue and redemption of such securities and instruments events like payments of income and dividends.


Conclusion
Capital Market is a type of market in which financial products like equity and debt are bought and sold, Capital Market helps to raise money for long-term investment. Financial Market is a market in which people trade financial securities like derivatives, stocks, bonds, commodities, etc, Financial Regulation is a regulation or regulatory authority to particular requirements, restrictions, and guidelines, to maintain the stability and integrity of the financial market. Stock Exchange is a platform where traders can buy and sell securities like shares of stock and bonds and other financial instruments.








Comments

Popular posts from this blog

Indices in The Stock Market

What is Investment and How to Invest ?

Common Mistakes in Stock Trading

Primary Market VS Secondary Market

IPO-Initial Public Offering

What is Capital Flow ?

Why do Companies Issues Shares and Types of Primary Market Issuance

Habits of Successful Investors-Most Successful Investors of all Time

What is a mutual fund? and Types of mutual funds

What is DRHP? and What is ASBA?