Capital markets are places where people and organizations with money to invest connect with those who need money to grow their businesses or fund projects. These markets include the stock market and the bond market.

In the stock market, companies sell shares of their ownership to investors. When a company first sells its shares, it’s called the primary market. After that, investors can buy and sell these shares among themselves in what’s called the secondary market.

In the bond market, companies or governments borrow money from investors and promise to pay it back with interest.

Capital markets help businesses get the money they need to grow and innovate. They also give investors a way to earn returns on their savings. These markets are important for the overall economy because they ensure money is directed to the most productive uses, helping to drive economic growth and stability. Regulatory bodies oversee capital markets to make sure they are fair and transparent, protecting investors and maintaining trust in the system.