Capital Markets

Definition of Capital Markets as it relates to Finance, Derivatives

Capital Markets refer to a system where entities such as companies and governments can raise capital by issuing and trading financial securities. These markets facilitate the flow of funds from investors to businesses, enabling economic growth and development. Capital Markets encompass various types of financial instruments including equities, bonds, and derivatives. Equities represent ownership in a company, while bonds are debt obligations that promise future interest payments and principal repayment. Derivatives are financial contracts whose value is derived from an underlying asset, such as stocks, bonds, commodities, currencies, interest rates, or credit ratings. Capital Markets provide a platform for raising long-term funds and facilitating investment opportunities for both institutional and individual investors, thus playing a crucial role in the global economy.

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