What is defined as all institutions facilitating transactions in long-term financial instruments?

The capital market is defined as the segment of the financial market that facilitates transactions in long-term financial instruments, such as stocks and bonds. It serves as a platform where businesses can raise funds for long-term investments by selling equity or debt securities to investors. This market is essential for economic growth because it allows firms to access the capital needed to expand their operations and invest in projects that may take a significant amount of time to mature.

Long-term financial instruments typically have maturities greater than one year, differentiating them from the money market, where short-term debt instruments, such as treasury bills and commercial paper, are traded. The capital market plays a critical role in the allocation of resources in the economy by connecting savers who supply capital with borrowers who seek to invest that capital in productive ventures.

Understanding this distinction helps clarify why the capital market is the correct choice, as it directly addresses the specific transactions involving long-term financial instruments, setting it apart from the other options provided, which focus on different facets of financial transactions.