Which of the following best defines a capital market?

A capital market is primarily defined as a market for long-term securities, such as stocks and bonds. This definition emphasizes the role capital markets play in facilitating the raising of funds that companies and governments utilize for long-term investments and projects. In these markets, investors provide capital in exchange for ownership in companies or credit in the form of debt that can be repaid over an extended period.

When organizations seek funding through capital markets, they typically issue securities with maturities that considerably exceed one year, as opposed to short-term borrowing, which is associated with money markets where instruments typically have maturities of one year or less. The focus on long-term securities in the capital market is crucial for fostering economic growth, as it allows businesses to finance expansion, infrastructure projects, and other long-term initiatives.

The other options highlight different aspects of financial markets. For example, a market exclusively for commodities refers specifically to the trading of physical goods or primary agricultural products, while a market for private equity concerns investments in private companies, typically involving longer term commitments but not directly aligned with the broader definition of capital markets.