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Capital market

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A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year,[1][dead link‍] as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Financial regulators, such as the UK's Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties.

Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere.

Meaning

Capital Market basically means a market in which financial securities are traded between individuals or institutions. It is a very popular means of raising funds for enterprises (both public and private) as well as governments. It is a form of long term funding. This market is inclusive of both Bond and stock markets. Moreover capital markets are composed of a primary as well as a secondary market.[2]

Primary market is defined as the market in which new issues are sold for the first time. Forbes defines it as a market in which new stocks or shares are directly sold to the people who want to invest in the company issuing them. Example IPO.[3]

Secondary market on the other hand is the market in which existing securities are traded.

Regulatory authorities

See main article List of financial regulatory authorities by country

See also

References

  1. ^ Sullivan, arthur (2003). Economics: Principles in action. Upper Saddle River,: Pearson Prentice Hall. p. 283. ISBN 0-13-063085-3. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)CS1 maint: extra punctuation (link)
  2. ^ market, Capital. "capital markets".
  3. ^ Market, Primary. "Primary market".
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