The price of the securities is determined based on the demand and supply prevailing in the capital market for securities.

(i) Financial institutions that provide facilities for channeling savings, of small investors into avenues of productive investments are called Mutual Funds.
(ii) A mutual fund company invests the funds pooled from shareholders and gives them the benefit of diversified investment portfolio and a reasonable return

Capital market is a market where buyers and sellers engage in trade of financial securities like bonds and stocks. The buying/selling is undertaken by participants such as individuals and institutions.

(i) Venture Fund Institutions :
(a) Venture capital financing is a form of equity financing designed especially for funding new and innovative project ideas.
(b) Many specialised financial institutions have promoted their own venture capital funds.
(c) They include Risk Capital Foundation of IFCI, Venture capital of IDBI, SIDBI,TDICI and others.
(ii) Mutual Funds :
(a) Financial institutions that provide facilities for channeling savings of smallinvestors into a venues of productive investments are called "Mutual Funds".
(b) Specialized financial institutions like LIC,UT,etc., beside Commercial banks such as SBI, and Canara Bank are carrying out the business of mutual funds.
(iii) Factoring Institutions :
(a) "Factoring" is an arrangement whereby a financial institution provides financial accommodation on the basis ofassignment/ sale of account receivables.
(b) Some of the factoring institutions operating in India are SBI Factors and Commercial Services Private Limited, a subsidiary of  State Bank of India and Canbank Factors Limited, a subsidiary of Canara Bank.
(iv) Over the Counter Exchange of India (0TCEI) :
(a) The OTCEI was set up by a premier financial institution to allow the trading of securities across the electronic counters throughout the country.
(b) It addresses some specific problems of both investors and medium-size companies.
(v) National Stock Exchange of India Limited :
(a) NSEI was established in 1992 to function as a model stock exchange.
(b) The Exchange aims at providing the advantage of nation-wide electronic screen based "scripless" and "loorless" trading system in securities.

 

Following are the nature/characteristic of a capital market.
(i) Securities Market
The dealings in a capital market are done through the securities like shares, debentures, etc.The capital market is thus called securities market.
(ii) Price
The price of the securities is determined based on the demand and supply prevailing in the capital market for securities.
(iii) Participants
There are many players in the capital market.The participants of the capital market include individuals, corporate sectors, Govt., banks and other financial institutions.
(iv) Location
Capital market is not confined to certain specific locations, although it is true that parts of the market are concentrated in certain well-known centers known as Stock Exchanges. It has its impact in the overall economy, wherever suppliers and users of capital get together and do business.
(v) Market for Financial Assets
Capital market provides a transaction platform for long term financial assets.

A commodity market is a place where buyers and seller can trade any homogenous good in bulk. Commodities are commonly classified in two subgroups.
(i) Hard commodities : Hard commodities are raw materials typically mined, such as gold, oil, rubber, iron and ore.
(ii) Soft commodities : Soft commodities are typically grown agricultural primary products such as wheat, cotton, coffee and sugar.

Gilt-Edged Market also known as Government Securities market is the market for Government and semi-Government securities.
An important feature of the securities traded in this market. That they are stable in value and are much sought after by banks.
(i) Guaranteed return on investments
(ii) No speculation in securities
(iii) Institutional based investors which are compelled by law to invest a portion of their funds in these securities.
(iv) Predominated by such institutions as LIC, GIC, PFs and the commercial banks.

There are three ways by which a company may raise capital in a primary market. They are:
(i) Public issue: The most common method of raising capital by new companies is through sale of securities to the public. It is called public issue.
(ii) Rights issue: When an existing company wants to raise additional capital, securities are first offered to the existing shareholders on a pre-emptive basis. It is called rights issue.
(iii) Private placement: Private placement is a way of selling securities privately to a small group of investors.