Page 1 - Lesson Note 2

SAI INTERNATIONAL SCHOOL

Class-12
th
Business studies

Chapter – 10, Financial Market

Topics: Capital Market, Types, Primary Market.
(Lesson Note - 37)

The term capital market refers to facilities and institutional arrangements through which long-

term funds; both debt and equity are raised and invested. It consists of a series of channels
through which savings of the community are made available for industrial and commercial

enterprises and for the public in general. It directs these savings into their most productive use

leading to growth and development of the economy.

The capital market consists of development banks, commercial banks and stock exchanges. An
ideal capital market is one where finance is available at reasonable cost. The process of

economic development is facilitated by the existence of a well functioning capital market. In

fact, development of the financial system is seen as a necessary condition for economic growth.

It is essential that financial institutions are sufficiently developed and that market operations

are free, fair, competitive and transparent. The capital market should also be efficient in
respect of the information that it delivers, minimize transaction costs and allocate capital most

productively.

FINANCIAL MARKET

i. MONEY MARKET

ii. CAPITAL MARKET

Capital Market

i. Primary market
ii. Secondary Market