Difference Between Capital Market and Money Market: A Comprehensive Overview
The capital market and money market serve different purposes in the financial world. While the capital market provides funds for long-term investments in securities like stocks and debentures, the money market deals with short-term borrowing and lending of funds. The capital market acts as a middleman between investors and entrepreneurs, focusing on raising funds from the public for investment, whereas the money market serves as a link between depositors and borrowers, specializing in short-term lending among financial institutions. Additionally, the degree of risk involved in the capital market is higher compared to the money market.
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FINANCIAL MARKETS
... Difference between capital market and money market:- The main differences between capital market and money market are as follows-
BASIS OF DIFFERENCE CAPITAL MARKET MONEY MARKET Period of Loan The capital market provides money and capital for investment. The money market provides money and capital for investment. long term short term Nature of Capital The finance provided by capital market may be used both for fixed capital and working capital. The finance provided by money market is used, usually for working capital requirements. Components The main component of capital market is stock exchange which deals in share and debentures. The main components of money market includes call money market, Bill market, acceptance houses and Collateral loan market.
BASIS OF DIFFERENCE CAPITAL MARKET MONEY MARKET Capital market acts as a middleman between investor entrepreneur. Money market acts as a link between depositor and the borrower. Middleman the the and Underwriting of share is one of the main activities of capital market. One of the main activities of money market is sell and purchase of bills. Main Activity It's specialised in raising funds from public and invest these funds in security is with the motive to earn profits for their customers. constituents are The constituents of money market specialised lending funds of financial and non financial institution to each other with the motive to earn interest in come for their customers. Specialisation in The main function of capital market is mobilization of resources into productive channels. The main function of money market is lending borrowings of funds. Functions and The degree of risk involved is very high. The degree of risk involved is very low. Degree of Risk
