What are the different types of capital markets?
The "capital market" label is a flat term for all procedures and institutions providing transactions of long -term financial products. These products include loans, rental of capital and bonds. Two basic types of capital markets are over -the -counter markets and organized security exchange. In these two basic categories, different types of capital markets, such as primary, secondary, public and private markets, work.
Organized security exchanges are tangible markets that occupy physical space, such as an office or building, and justice and debt are traded in the premises. All other types of capital markets are over -the -counter. The United States has seven major organized security exchanges, including the New York Stock Exchange and the US Stock Exchange, which are two national markets. The other five markets, such as Boston or Philadelphia, are regional.
Companies that want to sell securities but do not meet organized stock exchange for list S, often use VolSales markets. Business can also use these types of capital market to avoid fees. Most of the over -the -counter transactions will be completed by a network of stock brokers, retailers and brokerage companies.
When the corporation decides to sell capital in the form of shares on the capital market, financial managers have to sell privately or publicly. Individuals and investment of conglomerates can purchase the company's securities on the public stock market offer. Shares sold in public markets are referred to as ordinary shares. Private stocks are sold to a limited number of investors on the private market.
Private capital markets come in two forms, private debts and stock markets that sell shares and other forms of shares. Investment companies often transmit risk capital to new projects using private capital markets. Shares offered by the procedures isOften more expensive than ordinary shares and applies in higher dividends.
other types of capital markets include primary and secondary markets. The primary market is created when the company offers its securities for the first time. If the shares are common and the company has never offered shares before, it is called the initial public offer of the Company or IPO. After an IPO company, it can continue to offer new shares on the primary market.
Secondary markets are those in which previously offered securities are sold and traded. The first buyer buys on the primary market, but if he decides to sell or exchange this share, he does so on the secondary market. Only initial purchases on primary markets have a direct influence on the company issuing shares.