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Capital Market

The market dealing with long term financial transactions is known as capital market. Hence capital market is a market for long term loans. 

According to Duddley and Luckett, “A capital market is just a market for capital funds. Strictly speaking, the capital market performs the transactions involving long term debt.”

World Bank has defined the capital market as the market in which long term, financial instruments such as equity and bonds are traded.

Hence in conclusion, capital market refers to the market having following features;

· Capital market makes available funds for long term investment.

· The maturity period of capital market is more than one year.

· Capital market handles long term finance, deposits and loans.

· The risks are higher in capital market because the maturity period is long. Anything may happen in the long run.

· The sources of capital market are debentures, shares and government securities.

· The capital market has indirect relationship with central bank.Central bank influence capital market through money market.


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