Question

This is a market where there is an option to sell and buy new and old financial instruments. It facilitates the transferring of financial resources from surplus units to deficit units.

(i) Identify and define the market.

(ii) Name the function of transferring of financial resources from surplus units to deficit units.

Answer 1

(a) Capital Market : A capital market may be defined as an organized mechanism meant for effective and smooth transfer of money capital or financial resources from the investors to the entrepreneurs. Here, productive capital is raised and made available for industrial purposes.

(b) Financial Intermediation.