\u2192 The term capital market refers to the facilities and institutional arrangements through which long-term funds, both debt and equity are raised and invested.<\/p>\n
\u2192 An ideal capital market is one where finance is available at reasonable cost.<\/p>\n
\u2192 Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, and stocks.<\/p>\n
\u2192 Like any market, the capital market is also composed of those who demand funds (borrowers) and those who supply funds (lenders).<\/p>\n
\u2192 According to Aran K. Datta, capital market may be defined as \u201ca complex of institutions investment and practices with established links between the demand for and supply of different types of capital gains\u201d.<\/p>\n
\u2192 The dealings in a capital market are done through the securities like shares, debentures, etc. The capital market is thus called securities market.<\/p>\n
\u2192 The price of the securities is determined based on the demand and supply prevailing in the capital market for securities.<\/p>\n
\u2192 The participants of the capital market include individuals, corporate sectors, Govt., banks and other financial institutions.<\/p>\n
\u2192 Capital market has its impact in the overall economy, wherever suppliers and users of capital get together and do business.<\/p>\n
\u2192 The capital market is divided into two i.e., primary market and secondary market.<\/p>\n
\u2192 Primary market is a market for new issues or new financial claims. Hence, it is also called New Issue Market.<\/p>\n
\u2192 There are three ways by which a company may raise capital in a primary market. They are:
\n(i) Public Issue, (ii) Rights Issue (iii) Private Placement<\/p>\n
\u2192 Secondary Market may be defined as the market for old securities, in the sense that securities which are previously issued in the primary market are traded here.<\/p>\n
\u2192 For a speedy economic development adequate capital formation is necessary.<\/p>\n
\u2192 A number of institutions of finance have been established to cater to the credit requirements of various segments of industry and needs.<\/p>\n
\u2192 The foreign exchange market abets the foreign exchange trading.<\/p>\n