capital market

Name:Chelsea Hetharie

Nim: 2017-30-132
 what is the capital market?
The capital market is a state financial institution whose activities in terms of supply and trading
securities (securities).

Capital markets can be interpreted as a professional institution that deals with securities trading and
public securities related securities.So that the common capital market is known as a meeting place of
sellers and buyers of capital or funds.

The capital market is a market for various long-term financial instruments that can be traded, either in
the form of debt or equity, whether issued by the government, public authorities, or private
companies.The capital markets provide various alternatives for investors in addition to various other
investments, such as: saving in the bank, buying land, insurance, gold and so on.
 types of capital markets
A. Primary Market

The Prime Market is the first stock offering from the issuer to the investors during the time set by the
issuer before the shares have not been traded in the secondary market. Usually within a period of at least 6
working days. The stock price in the primary market is defined by the underwriter and the go public company
based on the fundamental analysis of the company concerned.

B. Secondary Market (Secondary Market)

Secondary Market is the place where the sale and purchase transaction of shares among investors after
passing the period of initial public offering, within 90 days after the license is granted, such securities shall be
listed on the exchange.
 Capital Market Function
Place the meeting of parties who have more funds (lenders) with parties that require long-
term funds (borrower). The capital market has two functions: economy and finance. In the
economy, the stock market provides the facility to transfer funds from lenders to borrowers.

By investing the lenders expect the rewards or returns from the delivery of funds. While
for borrower, the existence of outside fund can be used for business development without
waiting for fund from the result of operation of company. In finance, by providing the funds
required by borrowers and lenders without having to be directly involved in the ownership
of real assets.
 capital market benefits
• For issuers

For issuers, the capital market has several benefits, including:

1. the amount of funds that can be collected amounted to large.

2. the funds can be received at once when the primary market is completed.

3. there is no convenant so management can be more free in fund management / company.

4. high corporate solvency improving corporate image.

5. the dependence of issuers on banks becomes smaller.

• For investors
Meanwhile, for investors, capital market has several benefits, among others:
1. the value of investment growth follows the economic growth.The increase
is reflected in rising stock prices that reached capital gain.
2. obtain dividends for those who own / hold shares and floating interest for
bond winners.
3. can simultaneously invest in some instruments that reduce risk