{"id":251701,"date":"2023-08-03T08:30:26","date_gmt":"2023-08-03T08:30:26","guid":{"rendered":"https:\/\/imarticus.org\/?p=251701"},"modified":"2024-04-02T07:08:44","modified_gmt":"2024-04-02T07:08:44","slug":"introduction-to-capital-markets-key-concepts-and-components","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/introduction-to-capital-markets-key-concepts-and-components\/","title":{"rendered":"Introduction to Capital Markets: Key Concepts and Components"},"content":{"rendered":"

The financial market provides convenience and means for sellers and buyers to trade or exchange different modes of financial assets. The money market and the capital market are two types of financial markets.\u00a0<\/span><\/p>\n

The capital market primarily deals with the stock and bond markets and provides long-term financing to governments, businesses, and other entities. Equities and debt securities are sold through the capital market. The money market comprises instruments like treasury bills, certificates of deposits, commercial papers, call money and repo rate. Potential candidates looking to upskill can look up <\/span>capital market courses<\/span> several institutes offer to gain in-depth knowledge.<\/span><\/p>\n

\"Capital<\/p>\n

This blog is perfect for finance aspirants wanting to learn about the capital market<\/a><\/strong>, its types, associated components and their importance in an economy.\u00a0<\/span><\/p>\n

Types of Capital Market<\/strong><\/h2>\n

The two types of capital markets are as follows –\u00a0<\/span><\/p>\n

Primary market\u00a0<\/strong><\/h3>\n

It is a financial system where a company introduces new securities, bonds, stocks or initial public offering (IPO) in exchange for cash. Thus, fresh investment is pumped into the financial market. The fund thus generated helps the company invest in capital assets like land, machinery and other similar aspects required for the company’s expansion.\u00a0<\/span><\/p>\n

Secondary market<\/strong><\/h3>\n

This financial system enables buyers and sellers to exchange previously issued securities, bonds, debentures or stocks. The secondary market also aims to raise the fund value so that both sellers and buyers benefit. The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are examples of secondary markets in India.\u00a0<\/span><\/p>\n

Stakeholders of Capital Market<\/strong><\/h2>\n

There are two types of stakeholders in the capital market:\u00a0<\/span><\/p>\n

Suppliers of funds\u00a0<\/strong><\/h3>\n

Suppliers of funds typically consist of banks, insurance houses, and institutions holding public pension or retirement funds.\u00a0<\/span><\/p>\n

Users of funds<\/strong><\/h3>\n

Users are private and government institutions financing projects, business houses, manufacturers, and even individuals contemplating home and vehicle purchases.\u00a0<\/span><\/p>\n

Intermediaries of Capital Market<\/strong><\/h2>\n

Organisations or individuals who assist in bridging gaps between the surplus and deficit parties are termed financial intermediaries. The different intermediaries of capital markets are as follows –\u00a0<\/span><\/p>\n