Capital markets are the financial markets in which stocks, bonds, bonds, etc. can be exchanged between buyers and sellers. The capital market is absolutely essential for the functioning of economic production. Capital markets trading is done only for long-term investments, the trading activities will be carried out by the participants known as individual investors, companies, governments or even the financial sector. The capital market is a broad place where most people trade. It is observed all over the world, so only the trading systems have been computerized and some of the computerized services are available to the public and some services are monitored by the Securities and Exchange Commission or the financial industry. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original Essay The capital market is different from the money market because in the capital market, long-term debt and equity financing is provided to the government and corporate sector. Capital market institutions set up people's savings and lend the savings of funds over a long period of time, they also provide loans such as rupee loans, foreign loans, advisory and underwriting services. Capital markets play an important role among savers and investors. Savers are those who lend their savings of funds, on the other hand investors are those who borrow such savings of funds. In the capital market, there are two categories of financial instruments commonly traded by investors and they are as follows: Shares : Equity securities are known as shares, issued for a medium or long-term period of time, equal to one or more years. Shares are issued by companies to investors or the financial sector. Bonds: Debt securities are known as bonds, issued for a medium or long term period of time which is one or more years. Bonds will be issued by the government and companies also to investors or the financial sector. In capital markets, people trade in two different types of markets which are as follows: Primary market. Secondary market. The primary market is a market place where new issuance or re-issuance of securities is carried out by companies directly to investors. In the primary market, only long-term instruments will be issued for the purpose of raising funds through the capital market. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay Primary Market Features: No need to pay brokerage commission. It is a place where various types of products are traded. There is no particular place for the new issue of securities. It is issued directly to investors by the issuing companies. The primary market plays a vital role in capital formation. New issues are issued directly to investors for the purpose of expanding the business. The issuing company will receive the funds from the investors and new security certificates will be issued to the investors.