Overview of Capital Markets
Overview of Capital Markets
Overview of Capital Markets
Cash Derivatives
Market Market
What is Capital Market
A capital market is a market for securities (debt or
equity), where business enterprises (companies) and
governments can raise long-term funds. It is defined as a
market in which money is provided for periods longer
than a year.
Primary Secondary
Market Market
Bond
Stock Market
Market
Bonds or Fixed Income Securities
Bond or Debentures represent long-term debt instruments.
The issuer of a bond promises to pay a stipulated stream of
cash flows.
1.0
Variance of
portfolio return
1 10 20 30 40 50
Number of stocks
Risk Reduction Through Portfolio
Diversification
(b) Risk reduction through domestic and
international diversification
1.0
Variance of
portfolio return
Variance of
U.S. Stocks
return on
0.27
typical stock International Stocks
0.12
1 10 20 30 40 50
Number of stocks
Stock Market Indices
With large number of companies listed on the Bombay stock
exchange and NSE, it is not possible to look at the prices of
every stock to find out whether the market movement is
upward or downward.