EconomicsNEB 2082
State any one difference between money market and capital market.
1Answer
The money market and capital market differ primarily in the following way:
| Aspect | Money Market | Capital Market |
|---|---|---|
| Time Period | Short-term (up to 1 year) | Long-term (more than 1 year) |
| Purpose | Meets short-term financial needs | Facilitates long-term investment and financing |
| Participants | Banks, financial institutions, government | Corporations, governments, investors |
| Instruments | Treasury bills, commercial papers, call money | Shares, debentures, bonds, stocks |
| Risk | Lower risk | Higher risk |
In summary, the money market deals with short-term funds, while the capital market handles long-term investments.
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