Classification

Primary vs. Secondary Markets:

Primary Market: This is where new securities are issued for the first time. Companies or governments raise capital by selling stocks or bonds directly to investors. Examples include Initial Public Offerings (IPOs) and the issuance of new bonds. Secondary Market: This is where previously issued securities are traded among investors. It provides liquidity to the market, allowing investors to buy and sell securities after their initial issuance. Examples include stock exchanges like the New York Stock Exchange (NYSE) and the Nasdaq, as well as bond trading. 2. Equity vs. Debt Markets:

Equity Market: This market deals with the trading of stocks or shares, representing ownership in a company. Investors in the equity market become shareholders and may receive dividends and capital appreciation. Debt Market: This market involves the trading of debt instruments, such as bonds. These instruments represent loans made by investors to issuers (governments or corporations). Investors in the debt market receive interest payments and the return of their principal at maturity. Key Points:

These classifications help to understand the different functions and roles within the capital market. The primary market facilitates the raising of new capital, while the secondary market provides liquidity and price discovery. Equity markets allow for ownership in companies, and Debt markets allow for lending to those companies, or governments. Understanding these classifications is essential for anyone involved in investing or finance.