Stocks and bonds are generally termed as the capital market securities. These are traded in separate markets. These capital market securities are used by a number of companies, corporations and governments to raise funds for various purposes.
These funds are raised for long terms. There are the regulatory authorities in every country to supervise the capital market securities and their respective market.The bond market is a part of the capital market and provides the opportunity to deal in the debt securities. Bond is the medium of dealing in the debt securities.
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As one of the capital market securities, bond enjoys a vast international market which is estimated around $45 trillion. A huge portion of this bond market transaction generally takes place in the over-the-counter market. On the other hand, the corporate bonds are listed on the exchanges.
There are different types of bonds available in the market like the corporate bond, The municipal bond, the government bond and many more. Among all these capital market securities, the government bond is the most secured one. The government bond market is very big and its liquidity is also beyond comparison.
Another important capital market securities is known as stocks. These are preferred by the investors because an investor can get huge returns from this capital market instrument. The stock market is used for trading of company stocks, other securities and derivatives. $45 trillion is the estimated size of the global stock market. This market is used by the companies to raise funds for different purposes. At times, the governments also turn towards the stock market to generate funds.
The market participants include every kind of investor. There are both the individual investors and the institutional investors who are taking part in the market.
In the past, there were only the individual investors in the market but the market trend has completely changed and todays market is mainly dominated by the institutions which in turn, is increasing the volume of the market.
The investor should take proper care while selecting the capital market securities because the risk factor related to these securities are different.
At the same time, the returns may also vary. So a proper research should be done before investment.