A capital market is a financial marketplace where long-term debt and equity securities are bought and sold. It is essential for economic growth as it facilitates the raising of capital for businesses and governments.

**Key Components of Capital Markets**:

1. **Primary Market**: This is where new securities are issued and sold for the first time, such as through Initial Public Offerings (IPOs). Companies raise funds directly from investors to finance operations, expansions, or other projects.

2. **Secondary Market**: Once securities are issued, they are traded among investors in the secondary market. Stock exchanges, such as the New York Stock Exchange (NYSE) and NASDAQ, are prominent platforms for these transactions.

**Types of Securities**:

1. **Equity Securities**: These include stocks, which represent ownership in a company. Investors can earn returns through dividends and capital gains.

2. **Debt Securities**: These include bonds, which are essentially loans made by investors to borrowers. Bondholders receive regular interest payments and the return of the principal amount at maturity.

**Role and Importance**:

Capital markets are vital for channeling savings and investments between suppliers of capital (investors) and users of capital (businesses and governments). They provide liquidity, enabling investors to buy and sell securities easily. This liquidity helps in price discovery, reflecting the value of securities based on supply and demand dynamics. Additionally, capital markets support economic growth by enabling efficient allocation of resources, fostering innovation, and promoting financial stability.