Definition: What is the Capital Market? 

The capital market is a venue that connects providers of capital (or investors) with individuals and businesses that are seeking capital funding. 

Capital markets allow the selling and buying of equity, debt and other long-term investments. 



Types of Capital Markets

A capital market can include primary markets or secondary markets. 

What is the Capital Market

Image Source: What is the Capital Market

Primary markets issue new bonds and stocks and sells them to investors. Secondary markets deal with already created securities and do not issue new ones. 



Additional Overview and Definition of Capital Markets

A capital market usually has many different participants, from individual investors to companies and financial institutions. 

Providers of capital want the highest possible returns and the lowest possible risk. This is a natural position for most investors, regardless of how much they’re willing to invest. 

On the other hand, receivers want to get as much capital as possible at the lowest cost. 

The size of a capital market is usually dependent on the size of the country’s economy, although in the last few years there have been other factors due to globalization. 



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