Capital Market

The IPOs and FPOs are utilised to arrange funds from the general public and there is a misconception that IPO and FPO are similar but there is some difference between IPO and FPO.

The companies raise long term funds from the capital market for their day to day operations, new project finance and expansion purpose. In order to raise public funds, the companies or government issue the securities like bonds, debentures or shares in the primary market.

There are multiple types of issues through which the organisations float stocks/ shares in the capital market, IPO and FPO are some of those mechanisms of issuing stocks in the capital market.

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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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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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