The capital market can be defined simply as the market where investment products such as stocks and bonds are bought and sold.
The players include all the people and organizations which support or take part in the process.
It is also another way of refering to the stock market when it is used as a platform for raising capital or money from the investing public to meet the company's financial needs.
It is an instrument used in mobilizing long term funds for long term investment. The funds are solicited through the issuance of stocks
to the public.
Explained further, it is a market whereby large amounts of money (capital) are raised by companies, governments and other organizations for long term use and the subsequent trade of the instruments issued in recognition of such capital.
The market is divided into
- Primary market
- and the secondary market.
New money is raised at the primary market level by issuing stocks and bonds to investors who can then trade them on the relevant Secondary market.
The operations of the capital market revolves around the Stock Market Exchange, which is regarded as the hub/engine for all the activities of the capital market involves.
The main function of the exchange includes:
- The provision of a market place where companies raise capital, in the primary market. The securities like stocks, Bonds are first introduced to the general public by way of Initial Public Offer (IPO)
- The provision of a market place where individuals can invest in the sales and purchase of stocks for the creation of wealth, this could also be done through the secondary market.
- Provide operators and participants with up-to-date information to help in its operations.