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 | 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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What are Treasury Bills? Treasury Bills of India

treasury bills

The Government of India approaches to the financial market to raise funds from the general public by selling different types of government securities. Treasury bills  (T-Bills) are one of the instruments which are used for short term requirement of funds. The Government also raises funds from the market for a longer duration (up to 40 years) by using other instruments like Dated Security (Government Bonds) depending on the requirement of money.

Thus Government utilise different instruments to raise funds from the financial market.

There are various infrastructure projects, construction and development projects, Government schemes and various free scheme are performing across the country.

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Types of Government Securities in India

types of government securities in india

There are several infrastructure projects, activities, government schemes which are running across the country. Hence the Government of India or State Government issue the government securities to fulfil such excess requirements of funds and recover the deficit or mismatch of cash flow occurred.

Before we discuss types of Government Securities in India, we must know what does it mean by Government Securities?

Hence, let’s understand the meaning and definition of Government Securities.

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