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What is the Capital Market?

Malcolm Tatum
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Updated: May 17, 2024
Views: 32,414
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When referring to a capital market, it is important to note that the term can refer to a rather broad range of products and services that are associated with finances and investments. To that end, a capital market will include such components as the stock market, commodities exchanges, the bond market, and just about any physical or virtual facility or medium where debt and equity securities can be bought or sold.

As a market for securities with a very broad reach, the capital market is an ideal environment for the creation of strategies that can result in raising long-term funds for bond issues or even mortgages. At the same time, it provides the medium for short-term fund strategies as well. Essentially, any type of financial transaction that is meant to result in the buying and selling of securities and commodities for profit can rightly be considered part of this market.

Institutions are also part of the framework of the capital market. Stock exchanges are one of the more visible examples of established operations in it. Along with the stock exchanges, support organizations such as brokerage firms also form part of the capital market. Over the counter markets are also included. By providing the mechanisms that make trading possible, these institutions make it possible to keep the process ethical and more easily governed according to local laws and customs.

Because of the broad structure of the capital market, investors of all types have the opportunity to participate in financial strategies that can strengthen the general economy as well create financial security. Persons who wish to focus on investment opportunities that are very stable and more or less ensure a modest return can find plenty of different offerings to choose from. At the same time, investors who tend to be more adventurous can also find a wide array of investment types that will allow them to take some additional risk and possibly realize larger returns on their investments. While the overall structure of the capital market may be broad, there are a number of checks and balances that help to keep the market on an even keel, ensuring that it functions in a manner that is both ethical and legal.

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Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

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Discussion Comments
By anon111799 — On Sep 18, 2010

what are the features of capital market?

By anon98444 — On Jul 23, 2010

list down the major roles of capital market?

By anon89067 — On Jun 08, 2010

what is an example of investments that are not capital markets?

By anon74635 — On Apr 03, 2010

What is an efficient capital market and why is it important for capital market to be efficient?

By anon58133 — On Dec 30, 2009

how is equity capital raised in a capital market?

By anon56717 — On Dec 16, 2009

what is the capital market structure?

By anon41120 — On Aug 12, 2009

what is the difference between internal capital market and external capital?

By anon41119 — On Aug 12, 2009

Given the near breakdown of key sectors of the American market, one might expect Asians to bring their money home. Quite the opposite has happened: Asian currencies have fallen sharply against the American dollar.

On my desk is a draft paper by a prominent Asian politician, sent to me privately for comment. It calls on Asians to take charge of their own financial destiny and invest their money in Asian markets rather than into the maelstrom of American markets. Privately, I advised the leader in question not to publish it.

By ntzaman — On Jul 13, 2009

why do people like the capital market

By anon30932 — On Apr 27, 2009

What are the main roles of the capital market?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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