Q.Explain the meaning, features and structure of the capital market.

The capital market mirrors the money market's basic logic — maturity defines the market — but at the opposite (long-term) end of the scale.

Meaning. The capital market is the market for long-term funds — financial claims and instruments with a maturity exceeding one year, or with no fixed maturity at all (as with equity shares). It is where businesses and the government raise long-term finance for new projects, capacity expansion, or long-term public expenditure, from savers willing to commit funds for a longer horizon in exchange for a return.

Features, distinguishing it from the money market covered earlier in this Maharashtra HSC (MSBSHSE) Economics chapter:

• Deals in long-term securities (equity shares, debentures/bonds), financing fixed capital rather than working capital.
• Carries higher risk than the money market, since returns depend on extended business/project performance and the principal is not guaranteed.
• Lower immediate liquidity, though listed securities can be sold on a stock exchange.
• Regulated primarily by SEBI, not the RBI.

Structure:

1. Primary market (new issue market) — where fresh securities are issued directly to investors (IPO, FPO, rights issue, private placement); funds raised flow directly to the issuer.
2. Secondary market — where already-issued securities are traded among investors via stock exchanges, providing liquidity and continuous price discovery.
3. Gilt-edged market — the market for government securities (Central and State bonds), the safest capital-market segment due to the sovereign guarantee; the RBI manages issuance and conducts open market operations here. …

Describing the capital market only as 'the stock market' — the stock exchange is just the secondary segment of the industrial securities market; the primary market, gilt- …