In segmented capital markets, the cost of capital is essentially determined by the domestic systemic risk of a security.
In integrated capital markets, on the other hand, the cost of capital is determined by the global systemic risk of securities, regardless of nationality.
The capital market is a financial market that buys and sells long-term debt securities or stock-backed securities, as opposed to a money market that buys and sells short-term debt securities.
Examples of highly organized capital markets are the New York Stock Exchange, the US Stock Exchange, the London Stock Exchange, and NASDAQ. Instead of trading on an organized stock exchange, securities can also be traded "over-the-counter".
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