Right now we will look into capital market examples having done the types and functions of capital market we have in the financial institution.
A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold. Capital markets are defined as markets in which money is provided for periods longer than a year.
The purpose of capital markets is to facilitate the circulation of capital (money) among participants in the economy (people, companies, governments).
In a very simplified overview of the capital market examples is these participants are either lenders (who have money to invest), borrowers (who need extra money in the present) or intermediaries (the banks and other institutions that connect the previous two).
The way by which these borrowers and lenders “meet” is by issuing and trading capital markets instruments, commonly known as securities. These securities basically serve as a certificate that says part A owes part B and specify the terms of the transaction. Each security has its own specific terms so there are thousands of different types of securities in the market. Capital markets are highly interconnected, so a disturbance in a capital market on the other side of the globe will likely impact trading in markets located in other countries.
A capital market is intended to be for the issuance and trading of long-term securities. When a publicly held company sells its securities in the capital markets, this is referred to as primary market activity. The subsequent trading of company securities between investors is known as secondary market activity.
Capital Market Examples
Some common capital market examples include; Bonds and Notes (US Treasuries, Gilts, Corporate Bonds, Corporate Notes, etc); Stocks and Shares issued by listed companies (FTSE, S&P, DAX, NASDAQ, etc). Derivatives (options, futures, forwards, swaps, etc), Exchange-Traded Funds (ETFs), convertible bonds, and other more complex structured products that are put together by investment banks to address complex and specific needs of treasurers and money managers.
Capital markets examples also includes the New York Stock Exchange, American Stock Exchange, London Stock Exchange, and NASDAQ.
More Posts on Capital Market Examples
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