Week 03 - Capital Markets and their efficiency



In the third week of lectures, I was educated on capital markets and its efficiencies. Capital markets fall under two categories, namely primary markets and secondary markets. Primary markets permit the insurance of new securities from the issuer to the investor.  The main objective of primary markets is a efficient and liquid environment where price adjustments can happen instantly (price discovery and formation). On the other hand secondary markets is based  on the idea where something is trade after having initially sold.  A few examples of major stock exchanges which consists both of these are FM, FTSE and ASI.  Meanwhile, the main role of capital marketing is the efficient allocation of the economy's capital stock and allocation of these stocks.
Capital market efficiency states that capital markets occur when share prices would reflect all the available necessary data.  Capital markets could be made more efficient by adjusting security prices frequently of participants or investors to depict the new information.

Image result for capital markets


When accessing the following link-
https://www.investopedia.com/terms/c/capitalmarkets.asp
I was able to understand deeper understanding into capital markets. what a capital market means is as follows, capital markets are known as venues where savings and investments are incorporated between the suppliers who have capital and those who are in need of capital. The entities who possess capital include  retail and institutional investors while those who require capital are individuals or entities such as businesses, governments, and people. Furthermore, it was also found that capital markets tend to improve transactional efficiencies.  These markets provide an opportunity for capital holders and capital seekers providing them a place where entities can exchange securities

Capital market efficiency states that capital markets occur when share prices would reflect all the available necessary data.  Capital markets could be made more efficient by adjusting security prices frequently of participants or investors to depict the new information.

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