WHAT IS CAPITAL MARKET?

Capital markets are a sub-part of the financial system.

Conceptually, the financial system includes a complex of

institutions and mechanism which affects includes a complex of
institutions and mechanism which affects the generation of
savings and their transfers to those who will invest.

It may be said to be made of all those channels through which

savings become available for investments
 DEFINATION OF CAPITAL MARKET

Capital market can be defined as:

A market for medium to long-term financial

instruments. Financial instruments traded in the capital
market include shares, and bonds issued by the Union
Government, State governments, corporate borrowers and
financial institutions.

In other words:
The capital market (securities markets) is the market for
securities, where companies and the government can raise
long-term funds. The capital market includes the stock
market and the bond market
 FEATURES

Engine of growth

Efficient capital Best regulated market

securities markets Increasing integration regulatory framework

 THREE ELEMENTS OF CAPITAL MARKET

FINANCIAL ASSETS/INSTRUMENTS/SECURITIES

FINANCIAL INTERMEDIARIES

FINANCIAL MARKETS
 FINANCIAL ASSETS / INSTRUMENTS / SECURITIES
The tangible/physical asset is one whose value depends on its
physical properties such as buildings, machines, furniture,
vehicles and so on.

The entity/economic unit that offers the future cash flows is the
issuer of the financial instrument and the owner of the
security is the investor. Depending upon the nature of
claim/return, an instrument may be:
 DEBENTURE/BONDS: Debenture/bonds is a debt
instrument indicating that a company has borrowed
certain sum of money and promise to repay it in future
under clearly defined terms.

TRUST(BOND)INDENTURE: is a complex and

lengthy legal document starting the conditions under
which a bond has been issued.

CAPITAL MARKET
 DEBENTURE REDEMPTION RESERVE: is a
requirement in a debenture indenture providing for the
systematic retirement of debenture/bonds prior to their
maturity.

TERM LOANS: is a loan made by a bank/financial

institution to a business having an initial maturity of
more than I year:

CAPITAL MARKET
 EQUITY CAPITAL:

Equity capital represents ownership capital, as equity

shareholder collectively own the company. They
enjoy the rewards and risks of ownership.

SOME TERMS:

AUTHORISED EQUITY/SHARE CAPITAL: is the

number of ordinary share capital that a firm can
raise without further shareholder approval.

CAPITAL MARKET