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Distinguish Between Moneymarket and Capital Market. - Secretarial Practice

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Distinguish between MoneyMarket and Capital Market.

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1 Meaning A Market where short term funds are borrowed and lend.

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 tern 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.
Concept: Concept of Financial Markets
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