Capital market is concerned with the lending and borrowing of ________ loans.

The correct answer is Mid-term and long-term.

Key Points

• Capital markets deal with financial instruments that have maturity periods of more than one year.
• These markets are essential for long-term funding, facilitating economic growth and investment.
• Instruments traded in capital markets include stocks, bonds, and other long-term securities.
• Capital markets are divided into primary markets, where new issues are sold, and secondary markets, where existing securities are traded.
• Entities such as corporations, governments, and institutions use capital markets to raise funds for long-term projects and operations.

Additional Information

• Primary Market
  • Also known as the new issue market.
  • It is where securities are created and sold for the first time.
  • Companies use primary markets to issue new stocks and bonds.
  • Initial Public Offerings (IPOs) are a common method of raising capital in the primary market.
• Secondary Market
  • Also known as the stock market or aftermarket.
  • It is where investors buy and sell securities they already own.
  • Provides liquidity to investors, making it easier to buy and sell securities.
  • Includes stock exchanges like the NYSE and NASDAQ.
• Bonds
  • Debt instruments issued by corporations, municipalities, or governments.
  • Investors receive periodic interest payments and the principal amount at maturity.
  • Considered lower-risk compared to stocks.
  • Include various types like government bonds, corporate bonds, and municipal bonds.
• Stocks
  • Represent ownership in a corporation.
  • Investors can earn dividends and capital gains.
  • Stocks are traded on stock exchanges.
  • Classified into common stocks and preferred stocks.