To really understand the capital market it is important to understand the concept of a market. A market is a place where people meet to buy and sell goods. Most Caribbean people are familiar with the markets where ground provisions and other items are sold. At these markets which have a fixed location there are a number of buyers and sellers. These buyers can compare prices and then make their selection after they are satisfied that they are getting the best value for their money. In these markets the sellers of the goods have the benefit of reaching a number of buyers in one place and this saves time and money. If there are a number of buyers wanting a particular item then naturally the seller will be able to get more for it than if there were only a few people who want the item. The seller would then set the price based on the demand for the commodity.

The capital market operates in the much the same way. It is where business people and investors are brought together some want to raise capital and others want a return on their funds.

There are a number of institutions that make up the capital market. These include but are not limited to:-

• merchant banks/ investment banks

• insurance companies

• finance companies

• unit trusts

• stock exchanges