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The capital market serves two primary functions: allocating savings for investment and facilitating asset transfers among economic units. It provides long-term debt and equity finance, supports liquidity, and helps in financial stability through various instruments such as equity shares, debentures, and bonds. Additionally, real estate capital markets play a crucial role in financing transactions and construction projects, influenced by monetary policy and regulatory factors.

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11 views2 pages

capital-final

The capital market serves two primary functions: allocating savings for investment and facilitating asset transfers among economic units. It provides long-term debt and equity finance, supports liquidity, and helps in financial stability through various instruments such as equity shares, debentures, and bonds. Additionally, real estate capital markets play a crucial role in financing transactions and construction projects, influenced by monetary policy and regulatory factors.

Uploaded by

hanztoling11
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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WORDS OF GODSMITH

the capital market of a modern economy has two basic functions :


first the allocation of savings among users and investment;
second the facilitation of the transfer of existing assets, tangible and
intangible among individual economic units .

Grant defines capital market in a broad sense as “a series of channels through which
the savings of the community are made available for industrial and commercial
enterprises and for public authorities .It embraces not only the system by
which the public takes up long- term securities directly or
through intermediaries but also the elaborate network of
institutions responsible for short - term and medium- term lending”

Capital market is generally understood as the market for long- term funds.

The capital market provides long- term debt and equity finance for the government
and the corporate sector.

The capital market also facilitates the dispersion of business ownership and the
reallocation of financial resources among corporations and industries .

The capital market plays a vital role in providing liquidity and investment
instruments.

The domestic capital market can help


financial stability by reducing currency mismatches .

The Euro - currency and Euro - bond markets are


international finance markets in terms of both the supply and demand for funds.

the capital market serves a very


useful purpose by pooling the capital resources of the country and
making them available to the enterprising investors .

CAPITAL MARKET INSTRUMENTS


The following instruments are being used for raising resources :
1 . Equity shares
2 . Preference shares
3 . Non - voting equity shares
4 . Cumulative convertible preference shares
5 . Company fixed deposits
6 . Warrants
7 . Debentures/bonds
8 . Secured premium notes (SPNs)
9 . Euro Convertible Bonds (ECBs)/Global Depository Receipts (GDRs)

The Capital market is directly responsible for the following activities:


(1 ) Mobilization or concentration of national savings for economic
development,
(3) Productive utilization of resources, and
(4) Directing the flow to funds of high yields and also strive for balanced and
diversified industrialization .

Real estate capital markets form the essential framework for valuing
-These markets are vital to the functioning of the real estate industry, enabling
developers and investors to access the capital needed for new construction projects
and investment ventures .

Real estate capital markets are the operating mechanism by whichreal estate
transactions are financed .
-Real estate capital markets meet the classical definition of a “market” — supply and
demand equilibrating to determine the price of capital .

Monetary policy and regulatory factors are also key dynamics in the functioning of
real estate capital markets.

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