Important Points for IC 89 - Management Accounting Exam
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Capital market is a market for securities both debt and equity where enterprises including companies and governments raise their long term funds.
Financial market is a market meant for creation of and exchange of financial assets: Mobilisation of savings and resource allocation, Price discovery, Liquidity and Low Cost Financing.
Financial markets are classified in a number of ways and basis: Matuity point of financial claims: Money market and Capital market; Type of financial claims: Debt market and Equity market; Delivery point of view: Cash markets and Future markets; Organisational structure: Exchange traded market and over-the-counter market.
The capital market deals with relatively long term financial instruments such as: Equity shares, Preference shares, Bonds, ADRs, GDRs and Derivatives.
Stock is one of the principal security/financial instruments, which signifies share of ownership in a corporation and represents a claim on the part of the corporations assets and earnings.
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