STUDY OF CAPITAL MARKET

PRESENTED BY: ROLL NO. 10-18

INTRODUCTION TO CAPITAL MARKET

Many people make the mistake of avoiding the financial markets, perhaps because they've heard horror stories of people losing money. The truth is, if you do nothing with the money you earn, you'll probably end up with less than you started with because of inflation. Generally, there are five main capital markets that are used by people to create and maintain personal wealth: Real estate Money Market Accounts Bank Accounts Bond Market Stock Market

We'll briefly discuss each of these five markets.

Meaning and Definition-Capital Market

The capital market is the market for securities, where Companies and governments can raise long-term funds. It is a market in which money is lent for periods longer than a year. It is a place where people buy and sell financial instruments be it equity or debt. It is a mechanism to facilitate the exchange of financial assets.

Types of Capital Market

Primary Market The Primary market is the segment in which new issues are made. It is for this reason that the Primary Market is also called new issues Market or IPO/FPO market. Many companies, especially small and medium scale, enter the primary market to raise money from the public to expand their businesses. They sell their securities to the public through an initial public offering.

Secondary Market
Secondary market is the segment in which outstanding securities are traded. It is for this reason that the Secondary market is also called Stock Market. Unlike the primary market, an investor can buy a security directly from another investor in lieu of the issuer. It is also referred as "after market". The securities initially are issued in the primary market, and then they enter into the secondary market.

Impact of Capital Market on the Economy

The Capital Market has various effects on the Economy. Some of these are:a) It provides a source of funding for Organizations. b) It provides an investment avenue. c) It provides a source of income for investors. d) It provides a source of revenue for the government in the form of Taxes. e) It provides a source of Meeting place for investors and Organizations.