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    Money Market Vs Capital Market

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    IrfaN Tamim
    The money market and capital market are both components of financial markets, but they differ in maturity period, credit instruments, nature, purpose, and risk. The money market involves short-term borrowing under 1 year using instruments like commercial paper and certificates of deposit. The capital market involves long-term borrowing over 1 year using instruments like stocks and bonds. The money market carries less risk due to short maturities, while risk is greater in the capital market.

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    Money Market Vs Capital Market

    Uploaded by

    IrfaN Tamim
    59 views1 page
    The money market and capital market are both components of financial markets, but they differ in maturity period, credit instruments, nature, purpose, and risk. The money market involves short-term borrowing under 1 year using instruments like commercial paper and certificates of deposit. The capital market involves long-term borrowing over 1 year using instruments like stocks and bonds. The money market carries less risk due to short maturities, while risk is greater in the capital market.

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    difference between Money market and capital Market

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    Money Market vs Capital Market

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    The money market and capital market are both components of financial markets, but they differ in maturity period, credit instruments, nature, purpose, and risk. The money market involves short-term borrowing under 1 year using instruments like commercial paper and certificates of deposit. The capital market involves long-term borrowing over 1 year using instruments like stocks and bonds. The money market carries less risk due to short maturities, while risk is greater in the capital market.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    59 views1 page

    Money Market Vs Capital Market

    Uploaded by

    IrfaN Tamim
    The money market and capital market are both components of financial markets, but they differ in maturity period, credit instruments, nature, purpose, and risk. The money market involves short-term borrowing under 1 year using instruments like commercial paper and certificates of deposit. The capital market involves long-term borrowing over 1 year using instruments like stocks and bonds. The money market carries less risk due to short maturities, while risk is greater in the capital market.

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    © All Rights Reserved
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    of 1

    Money Market Capital Market

    Is a component of the financial Is a component of financial


    Definition markets where short-term markets where long-term
    borrowing takes place borrowing takes place
    Lasts for more than one year
    Lasts anywhere from 1 hour to
    Maturity Period and can also include life-time of
    360 days.(less than a year)
    a company.
    Call money, collateral loan,
    Certificate of deposit,
    Repurchase agreements,
    Commercial paper, Eurodollar
    Stocks, Shares, Debentures,
    deposit, Federal funds,
    Credit Instruments bonds, Securities of the
    Municipal notes, Treasury bills,
    Government.
    Money funds, Foreign
    Exchange Swaps, short-lived
    mortgage and asset-backed
    securities.
    Homogenous. A lot of variety Heterogeneous. A lot of
    Nature of Credit Instruments
    causes problems for investors. varieties are required.
    Long-term credit required to
    Meets the Short-term credit establish business, expand
    Purpose of Loan
    needs of small investments. business or purchase fixed
    assets.
    Basic Role Liquidity adjustment Putting capital to work
    Stock exchanges, Securities and
    Central banks, Commercial exchange commission Nonbank
    banks, Acceptance houses, institutions, such as Insurance
    Institutions
    Nonbank financial institutions, Companies, asset management
    Bill brokers, etc. companies, brokerage houses
    etc.
    Risk is small in the money
    Risk is much greater in capital
    Risk market as short time give little
    market.
    chance for a default to occur
    Commercial banks are directly
    Market regulations are much
    closely regulated by CB to
    Market Regulation lesser for companies in capital
    prevent occurrence of a
    maket
    liquidity crisis.
    Indirectly related with central
    Directly and Closely related to banks and feels fluctuations
    Relation with Central Bank
    the central banks of the country. depending on the policies of
    central banks

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