Welcome to Money Online Investment
Companies utilize capital markets to raise money for projects by issuing stock IPOs, bonds and short-term money market securities. Individual investors wish to earn interest or dividends on their savings can meet companies looking to raise funds by issuing securities.
To illustrate how a corporate bond moves through capital markets, suppose AB Co. needs to raise $1000. AB Co. offers a 10-year bond on the bond market with a par value of $1000. The bond is purchased by someone wishing to earn interest on the $1000 that they have available. AB Co. receives the $1000 in cash and the investor receives a bond and the promise of repayment plus interest. Should the bondholder later decide he no longer wants the bond, he can sell it to another investor in the marketplace.
Capital market is a financial market in which long-term debt or equity-backed securities are bought and sold. These are defined as markets in which money is provided for periods longer than a year. It consists of primary markets and secondary markets. Primary markets deal with trade of new issues of stocks and other securities, whereas secondary market deals with the exchange of existing or previously-issued securities. Another important division in this it is made on the basis of the nature of security traded, i.e. stock market and bond market.