EconomicsNEB 2082

State any one difference between money market and capital market.

1

Answer

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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