Definition of Capital Market, Types and Functions

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 Capital Market:-

It is a long-term securities market which deals in Financial instruments and commodities. The maturity period of capital market is more than 1 year. Capital market provide ease of transactions for both the investor and the companies. Capital market commonly refers to as a stock market.


Types of Capital Market:-

There are two types of capital market they are-

1. Primary Market

2. Secondary Market


1. Primary Market:-

When for the first time the New securities are issued in a  market known as primary market. The main function of primary market is capital formation.

2. Secondary Market:-

The market for old securities. They commonly known as stock exchange or stock market. Here securities are bought and sold by investors.


Functions of Capital Market:-

(1)- Economic Growth

(2)- Continuous Availability of Funds

(3)- Stable and Systematic Security Prices

(4)- Cost Minimisation for Transaction and Information

(5)- Facilitates Trading of Securities

(6)- Promotes Saving Habits

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