BCB QA-SOLUTIONS ensure our clients whether Buyers or Sellers to engage in trade financial securities.
The financial term for investment funding is “capital.” It should come as no surprise then, that capital markets are places where investors and those seeking funds come together. Specifically, investors fund companies and municipalities via the purchase of equity securities (stocks) and debt securities (bonds).
Capital markets exist to create a free exchange of wealth. They allow investors to leverage the wealth-generating capabilities of larger entities for personal enrichment. Likewise, companies and municipalities can dictate their own capital-raising terms. Capital markets are effectively the basis for free-market economies.
What Are Capital Markets?
As mentioned above, capital markets facilitate the transfer of funds between those with capital and those who need it. This can happen through the buying and selling of financial instruments. For example,…
- Stock markets involve the buying and selling of stocks, representing company equity.
- Bond markets involve the buying and selling of bonds, which are debt securities.
- Forex (foreign exchange) markets involve currency trade, facilitating international business for companies.
There are other, smaller capital markets. Stocks, bonds and forex represent are most accessible and most prolific markets for investors. Anyone can come to these markets and participate. How people participate in capital markets depends on the exchange of capital. This occurs in primary and secondary markets.
Primary markets involve a direct transaction. A venture capital firm is an example of an entity that operates through a primary market.
Secondary markets involve transactions made through a broker. This is how most people participate.