The Capital Market



A market for funds is subject to the same sort of forces as are to be found in operation in other markets. The price of funds reacts to the usual laws of supply and demand. Within the broad framework there are separate ‘markets’ for different types of securities: long-term, short-term, gilt-edged, ordinary shares etc., and hence separate rates of return for such securities. The price of securities (and consequently the rate of return to funds) does not simply depend on the flow of new savings compared with the level of investment in capital projects, but on speculative movements reflecting the public’s varying preferences for holding cash rather than securities.


Capital Market Loanable Fund Business Finance Capital Project Fixed Return 
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Further Reading

  1. Paul Ferris, The City (Penguin 1965) chs 1, 2. (An amusing book which adds a touch of human interest to staid institutions).Google Scholar
  2. Sir Oscar Hobson, How the City Works, 8th ed. (Dickens Press 1966). (This provides an account of various specialist markets).Google Scholar

Copyright information

© K. Midgley and R. G. Burns 1969

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