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LSDefine
Simple English definitions for legal terms
capital market
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A quick definition of capital market:
A capital market is a place where people buy and sell stocks and bonds that take a long time to mature. It's like a big store where people can buy things that will make them money in the future. It's different from a regular store because the things being sold are not physical items, but rather investments. People use the capital market to invest their money and hopefully make a profit over time.A more thorough explanation:
A capital market is a type of financial market where long-term securities such as stocks and bonds are traded. It is a place where companies can raise money by selling their securities to investors. The capital market is different from the money market, which deals with short-term securities.
- A company issues bonds to raise money for a new project. The bonds are sold to investors in the capital market.
- A startup goes public by selling shares of stock to investors in the capital market.
These examples illustrate how companies can use the capital market to raise money for their business ventures. By selling securities to investors, companies can access a large pool of capital that they can use to fund their operations or expand their business.