Capital Markets

What are Capital Markets?

Capital markets are venues where savings and investments are channeled between the suppliers who have capital and those who are in need of capital. The entities that have capital include retail and institutional investors while those who seek capital are businesses, governments, and people.

Capital markets seek to improve transactional efficiencies. These markets bring those who hold capital and those seeking capital together and provide a place where entities can exchange securities.

Functions of Capital Markets

Some of the functions of Capital Markets are:

  • It acts in linking investors and savers
  • Facilitates the movement of capital to be used more profitability and productively to boost the national income
  • Boosts economic growth
  • Mobilization of savings to finance long term investment
  • Facilitates trading of securities
  • Minimization of transaction and information cost
  • Encourages a massive range of ownership of productive assets
  • Quick valuations of financial instruments
  • Through derivative trading, it offers insurance against market or price threats
  • Facilitates transaction settlement
  • Improvement in the effectiveness of capital allocation
  • Continuous availability of funds

The capital market is the best source of finance for companies. It offers a spectrum of investment avenues to all investors which encourage capital creation.

Types of Capital Markets

Capital markets are composed of primary and secondary markets. The most common capital markets are the stock market and the bond market.

1. Primary Market

The primary market is a new issue market; it solely deals with the issues of new securities. A place where trading of securities is done for the first time. The main objective is capital formation for government, institutions, companies, etc. also known as Initial Public Offer (IPO).

2. Origination

Origination is referred to as examine, evaluate, and process new project proposals in the primary market. It begins prior to an issue is present in the market. It is done with the help of commercial bankers.

3. Underwriting

For ensuring the success of new issue there is a need for underwriting firms. These are the ones who guarantee minimum subscription. In case, the issue remains unsold the underwriters have to buy. But if the issues are completely subscribed then there will be no liability left for them.

4. Distribution

For the success of issue, brokers and dealers are given job distribution who directly contact with investors.

5. Secondary Market

The secondary market is a place where trading takes place for existing securities. It is known as stock exchange or stock market. Here the securities are bought and sold by the investors. Now, let us have a look at the functions of secondary market:

  • Regular information about the value of security
  • Offers liquidity to the investors for their assets
  • Continuous and active trading
  • Provide a Market Place

Who is a Securities Analyst?

A security analyst is a financial professional who studies various industries and companies, provides research and valuation reports, and makes buy, sell, and/or hold recommendations.

Security analysts follow the performance of one or more stocks, sectors, industries, or economies in the market. Futures contracts are not securities because their performance is not dependent on the management or activities of outside or third parties. Options on these contracts are, however, considered securities since performance is dependent on the activities of a third party.

Usually, securities analysts work for research companies, investment banks or private equity firms and work in areas such as mergers and acquisitions, bankruptcy, and are involved in organizational moves that can impact the financial value of a company.

Security Analyst Skill sets

Securities analysts work for investment banks, private equity firms, venture capital firms, hedge funds, and research companies. They are involved in corporate events, such as mergers and acquisitions (M&A), corporate restructuring, bankruptcy, and other organizational moves that can impact the financial value of a firm.

Security analysts are apt with spreadsheets and numbers and should be able to effectively explain the results of their analysis to clients, management, and peers in the industry.

We recommend every individual looking to enter the role of a security analyst should take up this course and carry out the required understanding of the course.

Common Areas Covered in the Course

  • Sales & Trading
  • Asset Management
  • Wealth Management
  • Treasury
  • Risk Management
  • Commercial Banking

Course Duration

The course offered is valid for lifetime and provides complete flexibility for the learner to carry out the course on a self learning mode. However the average time taken for people to complete the course is a period of 6 months.

Course Certification

This course is provided by Corporate Finance Institute, Canada and is recognized internationally across organizations and provides the required skills and knowledge for application in the field of corporate financial modeling and valuation.

Course Fees

All our students will be able to get this course at a fees of USD 250/- for enrolment of the course click our course details mentioned on the side panel to register immediately.

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