Final answer:
The capital market indeed includes both fixed-income and equity securities, such as stocks and bonds. It serves as a platform for long-term financial transactions that facilitate the flow of funds from savers to borrowers, who utilize these funds for various investment projects with the goal of creating returns for the investors.
Step-by-step explanation:
The statement that the capital market includes both fixed-income and equity securities is true. The capital market is an essential component for the rechanneling of money from suppliers, like households, to demanders, such as businesses and the government. This broad market encompasses a variety of financial instruments, including stocks, bonds, government savings bonds, IRAs, and other investment vehicles that allow for funds to be loaned for more than a year. The capital market plays a critical role in the economy, providing a platform for financial transactions that fund corporate expansions, infrastructure projects, and government spending, among other long-term investments.
Critical to the functioning of the capital markets is the ability to repackage funds to benefit both the suppliers of capital, who are looking for returns on their investments, and the demanders, who are in need of funds to grow and advance their operations or projects. Stocks allow investors to own a portion of a company and participate in its financial success, while bonds are a form of fixed-income security through which an investor loans money to an entity in exchange for periodic interest payments and the return of the principal at maturity.