Definition of Capital Markets

Capital markets are a market place of exchange of securities between money suppliers and money seekers. There are two types of capital; debt and equity and hence the capital markets are of two types; stock market and bonds market.

Also capital markets are categorized on the basis of the nature of securities it deals with. The primary market is where newly issued instruments are bought and sold. A secondary market is where trading between parties is conducted with instruments that have been issued already. The primary markets offer exchanges of securities to a limited party such as large hedge funds or mutual funds who purchase directly from the issuing organization. The secondary markets like the New York Stock Exchange, offer already issued securities to the general public.\