Ans.: Instruments in capital markets can be classified into three categories: Pure, Hybrid and Derivatives. (1) Pure Instruments : Equity shares, preference shares, debentures and bonds which are issued with the basic characteristics without mixing the features of other instruments are called pure instrument.
What are the instruments in capital market?
Derivatives. Derivatives are capital market instruments that derive their value from an underlying asset. The underlying assets can be bonds, stocks, metals, commodities, currency, etc. The trade of these instruments is based more on speculation, however these can also be used for hedging and arbitrage purpose as well.
What are the 4 types of capital market?
The primary function of the capital market is to bring together investors who buy securities with those who sell them. The three main participants of the capital markets are savers (also known as investors), borrowers, and stockholders.