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Characteristics of Capital Market

The document discusses the key characteristics of capital markets. It notes that capital markets provide a link between borrowers and lenders through the trading of long-term financial securities like stocks, bonds, and debentures. Some key characteristics are that capital markets allow for long-term investment, provide timely and accurate information to investors, include both primary and secondary markets, facilitate capital formation, are regulated by governments, and provide liquidity through a variety of financial instruments. Overall, capital markets play an important role in enabling businesses and the economy to access financial capital needed for growth.

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UTKARSH ZAMBARE
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328 views12 pages

Characteristics of Capital Market

The document discusses the key characteristics of capital markets. It notes that capital markets provide a link between borrowers and lenders through the trading of long-term financial securities like stocks, bonds, and debentures. Some key characteristics are that capital markets allow for long-term investment, provide timely and accurate information to investors, include both primary and secondary markets, facilitate capital formation, are regulated by governments, and provide liquidity through a variety of financial instruments. Overall, capital markets play an important role in enabling businesses and the economy to access financial capital needed for growth.

Uploaded by

UTKARSH ZAMBARE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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BYK( SINNER) COLLEGE OF COMMERCE ,NASHIK

Characteristics of Capital Market

Name : Zambare Utkarsh Suresh


Std. : M.com II (B) (Sem- 4th)
Subject : Capital Market & Financial Service
Roll No. : 294
Introduction

Capital market is a market for borrowing and lending of


long-term finance that is for a period of more than one year. It is
an organized financial market where saving and investment are
channeled between the one who has sufficient money and one who
is in need of money.
Capital market basically serves as the link between the
savers and investors. This market involves the trading of long term
financial securities for raising and investing in long term finance.
The main types of instruments traded in capital markets are
Debentures, Shares, Government Securities, and Bonds.
Capital Market

Meaning : Definition :
 Capital market are financial The part of financial system
markets for the buying and concerned with raising capital by
selling of long- term debtor dealing in shares, bonds, and
long term securities having a other long term investments.
maturity-period (age)of one
year or more.
Characteristics of Capital Market

1. Link Between Borrowers And Lender


Capital market is a link between borrowers and lender.
It links the person having the surplus fund with the
one who has a shortage of fund. The capital market
provides different investment avenues in which the
person can invest. This help in providing borrowers
with long term funds by bringing large investment
from peoples.
Characteristics of Capital Market

2. Long Term Investment


Capital market is a market for trading of long term
securities. Long term investment avenues are provided
by it to the investors. Borrowers may raise fund for a
long period in the capital market here lending and
borrowing is for a period that is more than one year.
Long term financial instruments such as stocks, bonds
and debentures are traded in the capital market.
Characteristics of Capital Market

3. Accurate Timely Information :


Capital market provides accurate information to the investors. The
information must be provided timely. So that investor can make the
decision of investment whether to invest in a company or not.
4. Includes Primary Market & Secondary
Market :
Capital market of two types of Primary market and secondary market. The
Primary market is concerned with the issue of new securities. Here securities
are issues for the first time. Secondary market is concern with the existing
securities. Securities already traded is traded secondary market.
Characteristics of Capital
Market
5. Capital Formation :
Capital markets actions determine the rate of capital
formation in a market. Capital market offers attractive
opportunities to people who have surplus funds so
that they invest more and more in the capital market
and are invited to save more for profitable
opportunities. This way it accelerates the rate of
capital formation in the economy.
Characteristics of Capital
Market
6. Government Regulation :
The capital market works but under the advice of
government policies. These markets operate within
the framework of regulation and government rules,
for example, the stock exchange works under the
regulations of SEBI which is a government body.
Characteristics of Capital
Market
7. Provides Liquidity :
As the instruments may be convertible into
cash in the capital market. As per the need, of
the investor can convert their investment into
the liquid form. This is how capital markets
provide liquidity.
Characteristics of Capital Market

8. Variety of Instruments :
Capital market has a variety of instruments. Some
instruments are at high risk and some instruments are
low risk. This As per the risk taking ability of the
investor can choose between in these instruments.
Conclusion

Capital market allows traders to buy and sell stocks and bonds, and
enable businesses to raise financial capital to grow. Businesses also
have reduced risk and expenses in acquiring financial capital because
they have reliable markets where they can obtain funding.
In short, capital market paves the way for the increase in the
aggregate supply (productive capacity) and aggregate demand (
consumer Spending.) which is crucial for the short term and long term
economic development of the country. Capital market is a very
important part of the financial industry.

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