Question

Differentiate between 'Capital Market' and 'Money Market' on the basis of following: (i) Participants (ii) Instruments (iii)Expected Return…

Accepted Answer

Difference between Capital Market and Money Market Basis Capital Market Money Market --- --- --- Participants Financial institutions, banks, corporate entities, foreign investors and ordinary retail investors from members of the public. Institutional participants such as RBI, banks, financial institutions and finance companies. Instruments Instruments traded are Equity shares, debenture bonds, preference shares, etc. Instruments traded are Short-term debt instruments such as— T- bills, trade bills, reports, commercial paper and certificate of deposit. Expected return The investments yield a higher return than the money market. The investments yield a lesser return than capital market. Safety Capital markets are riskier than money markets. Money market is generally much safer with a minimum risk of default. Duration The capital market deals in medium and long-term securities. Money market instruments have a maximum tenure of one year or may even be one day.

Differentiate between 'Capital Market' and 'Money
Market' on the basis of following:
(i)
Participants
(ii)
Instruments
(iii)
Expected Return
(iv)
Safety
(v)
Duration

Marking-scheme solution

More from Financial Markets

Basis	Capital Market	Money Market
Participants	Financial institutions, banks, corporate entities, foreign investors and ordinary retail investors from members of the public.	Institutional participants such as RBI, banks, financial institutions and finance companies.
Instruments	Instruments traded are Equity shares, debenture bonds, preference shares, etc.	Instruments traded are Short-term debt instruments such as— T- bills, trade bills, reports, commercial paper and certificate of deposit.
Expected return	The investments yield a higher return than the money market.	The investments yield a lesser return than capital market.
Safety	Capital markets are riskier than money markets.	Money market is generally much safer with a minimum risk of default.
Duration	The capital market deals in medium and long-term securities.	Money market instruments have a maximum tenure of one year or may even be one day.

Differentiate between 'Capital Market' and 'MoneyMarket' on the basis of following:(i)Participants(ii)Instruments(iii)Expected Return(iv)Safety(v)Duration

Marking-scheme solution

More from Financial Markets

Differentiate between 'Capital Market' and 'Money
Market' on the basis of following:
(i)
Participants
(ii)
Instruments
(iii)
Expected Return
(iv)
Safety
(v)
Duration