Nature of 'capital market’ can be explained well with the help of its features. State any three such features of capital market.
Capital market is a market for medium and long-term funds. It includes all the institutions and organisations that provide long-term and medium-term funds. The common instruments used in capital market are shares, debentures, bonds, mutual funds, etc.
Features of capital market are:
(i) The capital market consists of series of channels through which savings of the public are made available for industrial and commercial enterprises.
(ii) The capital market directs the savings of the public (investor) into their most productive investment plan, leading to growth and development of the economy.
(iii) Participants in the capital market include corporate entities, stock exchanges, development banks, commercial banks, financial institutions, foreign investors and ordinary retail investors from members of the public.