CAPITAL MARKET & CAPITAL MARKET INSTRUMENTS
Financial market is a place or a system where financial assets or instruments are created and
exchanged by market participants. Financial markets play a significant role in performing the
resource management in an economy. They help capital creation by acting as a bridge between
the savers and the spenders through various financial instruments like equity, debt or a mix of
both. In the process it facilitates price discovery and providing liquidity for financial assets.
In every economic system, some units which may be individuals or institutions, are surplusgenerating
(savers) while others are deficit units (spenders). Savers can either invest or hold
their savings in liquid cash. Holding liquid cash is required to meet transaction or precautionary
or speculative needs. The surplus-generating units could invest in different forms. They
could invest in physical assets viz. land and building, plant and machinery or in precious
metal viz. gold and silver, or in financial assets viz. shares and debentures, units of the Mutual
Funds, treasury bills, commercial papers, etc.,
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