Question

What are the 4 major characteristics of capital market securities?

Answer 1

The characteristics of the capital market and its elements may be classified and measured in varieties of ways. There are a number of sub-markets having distinguished features and independent rates of yield. However, the capital markets assume the following characteristic:

Debt and equities instruments traded in the capital markets are intermediate or longer-term in maturity.
? The scope of the market is very wide.
? The supply of the new funds comes from the same sectors although it is funneled within the markets through financial institutions.
? The demand for the capital market instruments comes from five categories like individuals and households, business and financial corporation, central government, local government, and foreign government.
? Under the auspice of capital markets, both negotiated and open markets are widely used.
? Transactions in open markets influence the prices and yields of longer-term instruments immediately.
? Lon-term instruments in the open market are transferred among the investors in the over-the-counter market and organized exchanges rather than the raising of new funds in the primary markets.