What does capital markets primarily involve?

Capital markets are primarily involved in the trading of securities and investments. This encompasses a wide range of financial instruments, including stocks, bonds, and other securities, which are bought and sold in these markets. The primary function of capital markets is to facilitate the raising of capital by enabling borrowers (such as corporations and governments) to obtain funds from investors looking to invest their savings.

In capital markets, companies can issue equity to raise funds for business operations, while government entities may issue bonds as a means to finance public projects or manage budget deficits. The trading aspect refers to the marketplace where investors can buy and sell these securities, thus providing liquidity and enabling price discovery based on supply and demand.

While other investment avenues like real estate or government financing play roles in the broader financial landscape, capital markets are specifically focused on the exchange of securities and investments. This distinct aspect is what sets option C apart as the correct answer.