Justify the following statement : Capital market is useful for corporate sector.

Answer: The statement is correct, because the capital market helps companies raise long-term funds and gives their securities liquidity and visibility.

• Source of long-term funds: companies raise capital through IPOs, FPOs, rights issues, private placement, debentures and bonds in the primary market.
• Variety of instruments: companies can choose equity, preference shares, debentures or bonds to suit their capital structure.
• Liquidity to securities: the secondary market lets investors buy and sell the company's securities, so investors are willing to invest.
• Valuation: market prices reflect the performance and goodwill of the company.
• Growth and expansion: easy availability of funds helps companies in expansion, modernisation and diversification.
• Foreign capital: companies can also attract foreign investors.