Difference between capital market and money market
Answers
Answer:
Money market are used for short term lending or borrowing usually the assets are held for one year or less whereas, Capital market are used for long term securities they have the direct or indirect impact on the capital.
Answer: BASIS FOR COMPARISON MONEY MARKET
Meaning:-
Nature of Market
Financial instruments
Institutions
Risk Factor
Liquidity A segment of the financial where market lending and borrowing
of short term securities are done.
Nature of Market Informal
Treasury Bills, Commercial Papers, Certificate of Deposit, Trade Credit etc.
Central bank, Commercial bank, non-financial institutions, bill brokers, acceptance houses, and so on.
Low
High
Purpose To fulfill short term credit needs of the business.
Time Horizon Within a year
Merit Increases liquidity of funds in the economy.
Return on Investment Less
CAPITAL MARKET A section of financial market where long term securities are issued and traded.
Formal
Shares, Debentures, Bonds, Retained Earnings, Asset Securitization, Euro Issues etc.
Commercial banks, Stock exchange, non-banking institutions like insurance companies etc.
Comparatively High
Low
To fulfill long term credit needs of the business.
More than a year
Mobilization of Savings in the economy.
Comparatively High