- Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc.
- The buying/selling is undertaken by participants such as individuals and institutions.
- Capital markets help channelise surplus funds from savers to institutions which then invest them into productive use.
- Generally, this market trades mostly in long-term securities.
- Capital market consists of primary markets and secondary markets.
- Primary markets deal with trade of new issues of stocks and other securities, whereas secondary market deals with the exchange of existing or previously-issued securities.
- Another important division in the capital market is made on the basis of the nature of security traded, i.e. stock market and bond market.
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