Capital Market
The capital market is a financial market where long-term investments are traded, such as stocks, bonds, and other securities. The capital market is primarily used to raise capital for companies, governments, and other organizations that need to fund long-term investments or projects.
The capital market is different from the money market, which is used to trade short-term debt instruments such as Treasury bills and commercial paper. The capital market is generally considered to be more risky than the money market, but it also offers higher returns over the long term.
There are two primary types of capital market transactions: primary market transactions and secondary market transactions. In a primary market transaction, new securities are issued and sold to investors. This typically occurs when a company issues new stock or bonds in order to raise funds for a new project or investment. In a secondary market transaction, existing securities are bought and sold between investors. This occurs on stock exchanges and other secondary markets, where investors can buy and sell stocks, bonds, and other securities.
The capital market plays an important role in the economy by providing a means for companies and governments to raise the funds they need for long-term investments. It also provides investors with opportunities to invest in a variety of securities, which can help to diversify their portfolios and mitigate risk.
However, the capital market can also be subject to fluctuations and volatility, and investors must carefully evaluate the risks associated with each investment opportunity. As such, it is important to work with a financial advisor or do your own research before making any investments in the capital market.
