Significant Features and Functions of Capital Market

Significant Features and Functions of Capital Market

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Long-term financial assets are traded in a capital market. It is very important in getting resources together and putting them in the right places. As a result, the Capital Market contributes to a nation's economic development. The functions are as follows:

• It moves parties' cash and other forms of savings to the Financial Markets. It fills the hole between the individuals who give Capital and the people who require it.

• Investors can make more money by taking on more risks.

• In addition to making it easier to mobilize capital, capital markets also contribute to the stabilization of stock prices. Participants have access to liquid exchange instruments like stocks, for instance.

• As a result, obtaining funds is an ongoing process. This is made possible by platforms like the Bombay Stock Exchange and the National Stock Exchange. It makes transactions and information cheaper.

• The exchange of shares and capital between two investors is made possible by intermediaries like brokers and traders. They can run their business with this help.

Characteristics of a Capital Market - Capital Markets have the following characteristics:

• Security: Capital Markets are regulated by the government. They operate under specific guidelines. As a result, investors view it as a secure trading environment.

• Distributes savings: The capital markets connect investors and savers. They help the economy grow by channeling savers' savings to industry players.

• Investment for the long term: Long-term investments can be made on a platform provided by capital markets. Capital Markets makes it possible for investors to make long-term investments.

• Creating Wealth: Investors who have extra cash can use the power of compounding to build wealth by investing in Capital Market Instruments like bonds and shares on the Capital Market.

• Supports middlemen: With the assistance of intermediaries like stock exchanges, brokers, banks, and others, the Capital Market moves savings from savers to borrowers. The Capital Market is assisting intermediaries in conducting business and earning income in this way.