STRUCTURE AND FUNCTIONS OF CAPITAL MARKET

STRUCTURE AND FUNCTIONS OF CAPITAL MARKET

Definition Capital market is a market for medium-term and long-term loans. The capital market serves the needs of industry and the commercial sector.

It comprises all the institutions which are concerned with either the supply of or demand for long-term capital.

Identify the types and functions of the institutions.

Explain the types and features of securities.

Explain the process of and requirements for accessing the capital market

List the benefits of the capital market.

Demonstrate the understanding of the meaning, transaction and trading methods in the secondary market.

Instruments used in capital market

Instruments used in capital market are mainly stocks and shares. Stocks and shares are securities purchased by individuals, which is an evidence of contributing part of the total capital used in running an existing industry.

At the end of a normal business year, stock and share holders receive dividend as a reward for contributing the money used in running the business. The word dividend is like a reward like interest paid to someone who gave his resources or funds to be used for business corporation or firm.

meaning of economics

Dividends are benefit or return on investment paid to a share holder in a firm at the end of every month

To know more about shares and stock market and how business enterprises and firms raises money to finance growth check out some our articles below or read from here

Institutions involved in capital market

Institutions involved in capital market include:

Issuing houses
Insurance companies
Development banks
Building societies
National Provident Fund (NPF)
Stock Exchange

If must understand what capital Market is, then we should take a little dive on what is capital. Don’t read what is capital and types of capital here, when you are done come back here and enjoy time

Advantages of capital market

Provision of long-term loans: Capital market provides long-term loans to the private and public sectors for investments.
Mobilization of savings: Savings are mobilized in the capital market.
Growth of merchant banks: The existence of capital market helps the
growth and development of merchant banks.
General running of the economy: The existence of capital market encourages the general public to participate in the running of the economy of the country.