College Subjective Notes

Commerce Notes

Difference between capital market and money market

3 years ago

by Anjali Yadav

Difference between capital market and money market

Difference between Money Market and Capital Market

In the context of financial system, the knowledge of difference between money market and capital market is imperative. The difference between both briefly explained as under:

s.no.	Basis of Difference	Money Market	Capital Market
1.	Meaning	Money market is a segment of the financial market where lending and borrowing of short term securities are done.	Capital market is section of financial market where long tern securities are issued and traded.
2.	Term	Money market is short-term loanable funds market.	Capital market is a long term funds market.
3.	period	Money market is for a period not exceeding one year.	It is a market for a period exceeding one year.
4.	Amount	Its instruments are of large amount. A treasury bill is of minimum 1 lakh and CD or CP is for a minimum of Rs. 25 lakhs.	Capital market instruments are of small amount. Share value is of Rs. 10 each and debenture value of Rs 100 each.
5.	capital Requirements	Money market supplies funds for current business operations, working capital requirements. etc.	It supplies funds for fixe capital requirements o business and long-term requirements.
6.	Instruments	Instruments of money market are TBs, B/E, commercial papers are certificate of deposits etc.	It deals in shares debentures, Government bonds etc.
7.	Secondary Markets	Its instruments oftenly do not have secondary markets.	Its instruments oftenly have secondary markets.
8.	Major Institutions	Major institutions have two major institutions i.e. the central bank and commercial banks.	Its major institutions are development banks and insurance companies.
9.	Places of Transaction	In case of money market, transactions oftenly take place over the phone without a formal place.	In capital market transactions take place a a formal place i.e. stock) exchange.
10.	Brokers/Dealers	In the money market, transactions are conducted without the help of brokers.	In the capital market transactions are conducted only through authorised dealers.
11.	Nature of market	Money market is informal in nature.	Capital market is formal in nature.
12.	Risk Factor	In money market there is low risk.	In capital market there is comparatively high.
13.	Purpose	To fulfill short term credit needs of the business.	To fulfill long term credit needs of the business.
14.	Merit	Increases liquidity of funds in the economy.	Mobilization of saving in the economy.
15.	Return on Investment	There is less return in money market	There is comparatively high return in capital market.
16.	Liquidity	Money market instruments are high liquid easily.	Securities are less liquid as compared to money market securities.
17.	Safety	Money market instruments are generally much safer	Capital market instruments are riskier generally much safer. both with return and repayment.

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Anjali Yadav

इस वेब साईट में हम College Subjective Notes सामग्री को रोचक रूप में प्रकट करने की कोशिश कर रहे हैं | हमारा लक्ष्य उन छात्रों को प्रतियोगी परीक्षाओं की सभी किताबें उपलब्ध कराना है जो पैसे ना होने की वजह से इन पुस्तकों को खरीद नहीं पाते हैं और इस वजह से वे परीक्षा में असफल हो जाते हैं और अपने सपनों को पूरे नही कर पाते है, हम चाहते है कि वे सभी छात्र हमारे माध्यम से अपने सपनों को पूरा कर सकें। धन्यवाद..

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