Explain the differences between money market and capital market?
Answers
Explanation:
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Money Market :
A random course of financial institutions, bill brokers, money dealers, banks, etc., wherein dealing on short-term financial tools are being settled is referred to as Money Market. These markets are also called wholesale markets.
In India, money markets serve an essential objective of providing liquid cash to borrowers and fund providers for a small period of time, while keeping a balance between the supply and demand short-term funds. The important money market instruments in India today cover call money, commercial papers, certificates of deposit, treasury bills, and forward rate agreements.
Money Market is a disorganised market, so the dealing is done off the public exchange market, i.e. Over The Counter (OTC), within two bodies by using email, fax, online and phones, etc. It supports the industries to accomplish their working capital demand by circulating short-term funds in the economy.
Capital Market:
A kind of financial market where the company or government securities are generated and patronised with the intention of establishing long-term finance to coincide the capital necessary is called Capital Market.
In this market, the buyers use funds for longer-term investment. The nature of the capital market is risky markets. Therefore, it is not used for short-term funds investment. Most of the investors obtain the capital markets to preserve for education or retirement.