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What is Capital Market

Capital market is a marketplace where buyers and sellers participate in buying and selling of financial securities like stocks, bonds, etc. The buying/selling is undertaken by participants such as individuals and institutions.

  • Capital market is one in which individual and institutions trade securities to raise funds.
  • Used by government and businesses to meet their medium and long term investment and projects.
  • Include bonds and stocks to finance activities.
  • Riskier with high return expectations.
  • Capital market channels saving and investment between supplier of capital and institutional investor and end user like businesses, government and individuals.


Capital markets help channelize surplus funds from savers to institutions which then invest them into productive use. Generally, this market trades mostly in long-term securities.

Capital markets are markets for buying and selling equity and debt instruments. Capital markets are vital to the functioning of an economy, since capital is a critical component for generating economic output. Capital markets include primary markets, where new stock and bond issues are sold to investors, and secondary markets, which trade existing securities.


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