The capital market provides business firms with the avenue to
Answer Details
The capital market is a place where companies can obtain funds for their operations and growth. These funds can be used for different purposes such as buying capital equipment, obtaining long-term or short-term funds, or leasing capital equipment.
Buying capital equipment refers to purchasing machinery or other assets that are used to produce goods or services. Long-term funds, on the other hand, are funds that are borrowed for a period of more than one year, while short-term funds are borrowed for a period of less than one year.
The capital market provides businesses with the option to obtain both long-term and short-term funds through the issuance of stocks or bonds. Stocks represent ownership in a company, while bonds are a form of debt that the company issues to investors. By selling these securities in the capital market, companies can raise funds to finance their operations or expand their business.
Additionally, companies can also lease capital equipment from leasing companies in the capital market. Leasing equipment allows companies to use the equipment without having to purchase it outright, which can help them conserve their cash and working capital.
Overall, the capital market provides businesses with various options to obtain funds for their operations and growth, including buying capital equipment, obtaining long-term and short-term funds, and leasing capital equipment.