The capital market is a market in which companies and states can raise medium to long-term capital by issuing securities.
In contrast to the short-term procurement of credit, this is a long-term procurement of capital. The most important segments of the capital market are the stock market and the bond market.
On the stock market, companies can raise equity capital by issuing shares and thus giving investors a stake. In return, investors receive shares in the company and participate in its profits. The stock market also offers companies the opportunity to raise their profile and improve their image.
The bond market allows companies and governments to raise debt capital by issuing bonds. Investors lend money to the issuer and in return receive interest and repayment of the principal at maturity. The bond market provides a way for companies and governments to raise large amounts of capital without having to relinquish control of their business.
Other important segments of the capital market are the foreign exchange market, the market for structured products and the market for derivatives. In contrast to the money market, where short-term money transactions take place, the financial instruments traded on the capital market usually have a maturity of at least one year.
The capital market plays an important role in financing companies and supporting economic growth. By raising capital, companies can grow, create jobs and promote innovation. The capital market thus contributes to strengthening the economy and creating wealth.
