Capital Market | Capital Market Instruments and Functions

capital market

The corporations, government entities or other financial institutions raise funds to fulfil their requirements of money through issuing/ selling securities to the general public. These securities can be equity or debt securities which the general investors buy for the sake of returns on their investments.

One link is missing in the whole process that is a ‘marketplace’ where these securities are traded (brought or sold) between issuer and buyers.

Hence in this article, we will learn about the capital market, capital market instruments, functions of the capital market and much more.

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Money Market and Capital Market | All You Should Know

money market and capital market

The financial systems of a country comprised of four different types of financial markets viz Money Market, Capital Market, Commodity Market and Forex Market. Each market deals with separate financial instruments and fulfil different types of credit requirements of businesses.

The corporates or government meet their short term or long term needs of funds by raising funds from the general public through these financial markets. 

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Primary Market and Secondary Market | A Detailed Comparison

Primary market vs Secondary market

The companies or government entities fulfil their short term requirement of funds through the money market whereas they raise funds from the capital market to meet their long-term needs. The financial market is classified into three categories viz Money market, Capital market and Forex market.

Further, the capital market can be divided into the Stock Market and Debt market. Now the stock market, as well as Debt market, can be classified into Primary market and secondary market.

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Primary Market | Meaning, Functions and Features

primary market

Working capital is the basic requirement of any company for its operation or expansion whether it is public or private, and raising funds from the general public is one of the most popular ways to arrange finance. The companies or government entities raise capital by issuing securities to the investors.

The investors purchase those securities to invest their money to make returns which could be in the form of dividend or interest. Thus the issuing organisations meet their requirement of funds.

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Merchant Banking | Origin, Scope and Functions

merchant banking

Every corporation whether it is emerging or establish, require funds at some stage during its operation and raise capital from the financial market is the most popular and convenient mode of arranging finance. Hence, the business corporates raise from the market by issuing financial securities and on the other hand individuals or institutional investors purchase these securities to invest their money to earn a profit.

Thus the role of merchant banks emerges in such circumstances. In this topic, we will learn the concept of Merchant Banking in brief.

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