This question was fairly popular but not well tackled by many candidates.  Majority of those that attempted it did not know what capital market meant.  They assumed it was a physical or geographical market – location rather than financial market where funds for medium and long term investments are borrowed or lent .  The overall candidates’ performance in the question was average.  Candidates were expected to state some of the following points in their answers:

(a)   The capital market is a financial market in which funds for medium and long  term investments are borrowed or lent.

(b) (i) Shares:   These are financial instruments utilized in the capital market for long term investments.  A share is the portion of a limited liability company owned  by an investor.

(ii)   Bonds:   This is a long term financial security used to source for funds.  Bonds may be  issued by firms, financial institutions or governments.  Bonds issued by the government are generally regarded as very safe.

(iii) Treasury certificates:   These are government financial securities which mature after a year.  They are issued by the government through the central bank to either borrow or lend money in the capital market.