Capital Markets: Domestic And International Essay

4527 words - 18 pages

Capital Markets: Domestic and International

Capital markets involve two parties in the midst of a financial process. There are domestic markets (markets in the US) and there are foreign markets (international such as Japan and China) that investors put much faith in. The term capital market is the market for securities and where companies and governments raise long-term funds, usually longer than a year. The market itself includes the stock market and the bond market. The capital market also includes the primary market (new issues are distributed to investors) and the secondary market (current claimed securities are traded). Without a financial market in place, borrowers would have much difficulty finding lenders themselves.
Capital markets promote and keep capitalism alive. The markets are a critical piece to may country’s economies and the bigger the markets the more potential for economic growth. It allows for consumers and businesses to have a share in the nation’s wealth. The availability of several ways to raise money needed is attractive because they can continue to strike into new sources of money over time. The goal of the markets is to increase investor confidence by more active participation. The markets require a free flow of information to run smoothly and efficiently and the internet can be used for up-to-the minute trade information.
According to Wikipedia,
The capital market is the market for securities, where companies and governments can raise long term funds. The capital market includes the stock market and the bond market. Financial regulators, such as the U.S. Securities and Exchange Commission, oversee the capital markets in their designated countries to ensure that investors are protected against fraud. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded. (Wikipedia, 2008)
Domestic Market
Most stocks in the US are traded on exchanges where buyers meet up and decide on prices. Some exchanges are physical while the others are virtual. The most impressive and notable exchange in the world is the New York Stock Exchange or NYSE. It was founded in 1792 when the Buttonwood Agreement was signed by 24 New York City stockbrokers and merchants. The most elusive and largest companies in America choose to trade with the NYSE.
The NYSE was the first exchange where trading is done face-to-face on the floor. There is a trading post where there is a specialist who has the job to match buyers with sellers. Prices are then usually determined using...

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