Question

Various forms of capital are used in the production of final goods and services. However, the term financial capital market refers to a. a market where firms with goods and services and households which demand goods and services interact. b. a market where savers and borrowers interact. c. a market where households with intangible capital and firms which demand intangible capital interact. d. a market where households with human capital and firms which demand human capital interact.

Answer 1

Answer: b. a market where savers and borrowers interact.

Explanation: Capital markets can be seen as one for long-term securities, including the stock market and the bond market. Its definition actually is an avenue where savings and investments are exchanged between those who have capital (savers) such as retail and institutional investors, and those who are in need of capital (borrowers) such as businesses, people and governments.

Capital markets is categorized into the primary and secondary markets and the most common capital markets are the stock market and the bond market.

Capital markets consist of the primary market (new securities are issued and sold here), and the secondary market (here, already-issued securities are traded between investors).