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Eco Economics

EconomicsNEB 2076 (old course)

What is capital market?

2

Answer

· Based on the official syllabus and past papers
Updated

The capital market is a financial market where long-term funds are raised by governments, businesses, and other organizations. It facilitates the buying and selling of long-term securities such as shares (equities), bonds, debentures, and other financial instruments with a maturity period of one year or more.

Key Features of the Capital Market:

  • Long-term financing: Provides funds for long-term investment needs.
  • Risk and return: Offers higher returns but involves greater risk compared to short-term markets.
  • Primary and secondary markets:
    • Primary market: New securities are issued (e.g., IPOs, bond issuance).
    • Secondary market: Existing securities are traded (e.g., stock exchanges like NEPSE in Nepal).
  • Regulation: Governed by authorities like the Securities Board of Nepal (SEBON) to ensure transparency and investor protection.

The capital market plays a crucial role in economic growth by channeling savings into productive investments.

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