What are the capital markets?
The capital market is an economic term for long -term generation of income by companies and governments. This market assumes that generated money has a pay period more than one year. Capital markets include a stock market and bonds and the primary and secondary versions of each. There is great supervision in the capital markets because a huge amount of money changes their hands. Most of the governments have regulatory bodies that monitor the system. If the expected payout is less than one year, then this transaction will take place on the money market. For example, the seven -year Ministry of Finance is part of capital markets, but there is a state treasury law on the money market. Primary stocks and secondary stock market are dealing with business capital and primary and the secondary bond market deals with the sale of debt. Other transactions usually take place on the money market.
The stock part of the market deals with its own capital. INIn this case, the buyer buys part of the company. The holder of the equity certificate owns the company, which is equal to the percentage of shares that own against the total issued shares. For example, if a shareholder owned 10 shares of a company that issued 1,000 shares, then the person would own 1% of the business.
part of the capital market bonds deals with debt. Bond is basically a loan; The issuer asks for money and the buyer gives them. The custody period states that the issuer must repay the loan, often with interest, in a certain time frame. Unlike shares, the bond holder has no ownership of the company.
primary and secondary areas of the market include measures and parties involved in the sale. The primary market of the company that issued shares or bonds is dealing directly with the buyer. In the secondary market, two parties unrelated to the issuer are trading with shares or bond.
It is easy to get or lose a huge amount of money on the capital markets. Because so much money mHands, most countries with organized exchanges have some form of supervision. The task of the guards is to maintain a fair platform, so anyone who buys and sells has access to the same information. People caught by violating rules are usually accused of securities fraud and marked as inside traders.