Role and importance of capital markets

Introduction

Spry plc is establishment listed company in economic market. Recently, Spry plc has given a great opportunities to expand their business which the directors believe that is benefit to their company. The project will cost about £200 million. No doubt, Spry plc is facing limited cash to reinvested, therefore Spry plc directors decide to look on outside sources to raise their funds in order to start their project soon. As a senior financial manager of Spry plc, I will

Capital Markets

Capital market is a market for security where company can raise more funds for their operation in bond and stock markrt. Capital markets is a market includes all related to the supply and demand for long-term capital institutions and transactions.for trading long term financial securities, including ordinary shares

Capital markets are markets for trading long term financial securities, including ordinary shares, long term debt securities such as debentures, unsecured loan stock and convertible bonds. Government bonds and other public sector securities such as Treasury bills and giltedged stocks are also traded on capital markets.

Broadly speaking, The capital market is part of the financial markets, which includes all related to the supply and demand for long-term capital institutions and transactions. Long-term capital, including the company's fractional ownership such as stocks, long-term bonds, long-term corporate bonds, more than a year of large negotiable certificates of deposit, real estate mortgages and financial derivatives, also including collective investment funds and other long-term form of loans, but does not include the commodity futures. The capital market is a market form, rather than a physical location, it refers to all those who traded on this market, institutions, and the relationship between them

Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere

The importance of cost of capital to large companies and its implications on capital structure.

Cost of capital

The cost of capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view "the expected return on a portfolio of all the company's existing securities."[1] It is used to evaluate new projects of a company as it is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.

The cost of capital is a company's cost of capital (including debt and equity), or from an investor's point of view, "all the company's existing portfolio of expected return." [1] It is used to evaluate the new company's project, because this is the minimum return investor's money, the company expects to determine a benchmark, a new project to meet.

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