Capital market, Financial Management

Capital market:

The term capital market is used to denote all the activities of the primary and secondary markets. It can also refer to the market for equity and debt instruments, which have a maturity of more than one year. Corporates, individuals and institutions participate in the capital market. The corporates raise capital required for their business in this market. The contribution of capital formation in the economic development is indispensable as already discussed in the earlier chapters. Capital is one of the important factors of production in the economy. Thus, the contribution of capital market which undertakes the investment and capital formation activities, is imperative in the economic development of a country. Mobilizing the savings from the surplus sectors in the economy in the form of investments, the capital market enables the deficit sectors in the economy to meet their needs. It also intermediates in the activities of the savers and the investors. The stock market, which is a part of the capital market, provides liquidity and marketability for the financial instruments. The important characteristics of the capital market are as follows:

An efficient capital market indicates the underlying strength or the health of the economy.

  • Capital market enables the companies to get finance through long or indefinite maturity instruments.
  • Capital market enhances the choice of investors by making available different investment schemes.
  • Capital market enhances the efficiency of optimum allocation of capital in the economy. By helping the flow of savings into the investments of more returns.

Capital market can be segmented into -

  • Primary Market, and
  • Secondary Market.
Posted Date: 9/10/2012 5:33:31 AM | Location : United States







Related Discussions:- Capital market, Assignment Help, Ask Question on Capital market, Get Answer, Expert's Help, Capital market Discussions

Write discussion on Capital market
Your posts are moderated
Related Questions
Specific Cost of Capital When the Cost of every source of capital is individually calculated, it is known as Specific Cost of Capital example Cost of equity, cost of debt, etc

You have just purchased a stock that would pay the dividends of the first four years as D1 = $0.65, D2 = $0.74, D3 = $0.79, D4 = $0.84. You were also told that the dividends would

What factors would you consider in evaluating the political risk related with making FDI in a foreign country? Answer: Factors to be considered as follow: a) The host countr

Sinking fund provisions is a pool of funds set aside to repay the debt. Under this, certain amount of money is kept aside every year form profit. It is then used

Why would an analyst use the Modified Du Pont system to calculate ROE when ROE may be calculated more simply? Explain. In fact, an analyst wouldn't use the Modified Du Pont eq


1. Your welfare depends on how much time you travel T and how much time you play P and is the product of the two, i.e.,  W = T * P (a) The total amount of time you have is 10 ho

Settlement Mechanism: Nifty index futures and option contracts are cash settled. All CMs are required to open a separate bank account with NSCCL designated clearing banks. T

2010 equity balance required: (600-20 - 25 - 15 - 20)= 520 employees eligible Total expected equivalent value = 520 x 500 options x $1.48 = $384,800 $384,800 x 3/4 years = $28

How is present value influenced by a change in the discount rate? Present value is oppositely related to the discount rate.  Alternatively, present value moves in the reverse dire