The Capital Market

Every business needs capital. Before setting up a business there must be a pool of money to buy the physical things which will be required and to pay the bills until the business is earning income. If a business wishes to expand at a later date, it will require more money. It may be able to provide that money itself by not paying out some of its profits, but in most cases it must go outside to get the money. The capital market provides the channels by which money is collected and made available to those who want it for use in business. In this chapter we will also see the part played by the Stock Exchange.