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प्रश्न
Distinguish between money market and capital market.
फरक स्पष्ट करा
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उत्तर
| S. No. | Basis | Money market | Capital market |
| 1. | Meaning | A market where short term funds are borrowed and lent. |
A market for borrowing and lending long term capital required by business enterprise. |
| 2. | Term of Finance | It provides short term funds, in short term instruments where the maturity is measured in days, weeks, or months. | It is a market for long-term instruments which is measured in years. |
| 3. | Instruments | The instruments dealt in the market are bills of exchange, treasury bills, banker’s acceptance, etc. | The instruments dealt in this market are bonds, debentures, equity shares and stock. |
| 4. | Functions | Money market exists as a mechanism of liquidity adjustments, i.e. a link between the depositors and borrowers | Capital market functions as a link between the investors and entrepreneurs. |
| 5. | Risk | The prices of these instruments do not fluctuate and they carry very low market risk. | The instruments are long term and subject to market fluctuations and so they carry very high financial and market risk. |
| 6. | Institution | The commercial banks are the important institutions in the money market. | The stock exchange is an important institution in the Capital Market. |
| 7. | Liquidity | With high trade volumes and low transaction costs, money market instruments are extremely liquid. | Compared to the money market, the capital market typically has less liquidity. |
| 8. | Safety | Because of their short maturities and excellent credit quality, money market instruments are typically regarded as safe investments. | Depending on the issuer and securities type, investments in the capital market incur different levels of risk. |
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