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Question
Answer each of these questions in about one hundred and fifty words:
Explain how capital markets are the most important source of raising finance for an entrepreneur.
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Solution
Capital markets are the most important source of raising finance for the entrepreneurs. This market:
- Mobilises the financial resources on a nation-wide scale.
- Secures the much required foreign capital and know-how to promote economic growth at a faster rate.
- Ensures the most effective allocation of the mobilized financial resources by directing the same either to such projects which are capable of the highest yield or to the under developed priority areas where there is an urgent need to promote balanced and diversified industrialization. The needs of entrepreneurs who actually use the savings for productive purposes are varied. The capital market satisfies the tastes of savers and the needs of investors through its financial instruments and institutions.
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