Question

Write the Difference between Capital and Money Market.

Answer 1

S.No. Basis	Capital Market	Money Market
1. Participants	Financial Institutions, Banks,. Corporate Entities, foreign investors and individuals	RBI, Banks Financial Institutions & finance companies
2. Instruments Traded	Equity shares, bonds preference shares and debentures.call money etc	Treasury Bills, Trade bills, commercial paper.
3. Investment outlay	Does not necessarily require a huge financial outlay.	Entails huge sums of money as the instruments are quite expensive
4. Duration	Deals in medium & long-term securities having maturity period of over one year	Deals in short term funds having maturity period up to one year.
5. Liquidity	Securities are less liquid as compared to money market securities.	.Money market instruments are highly liquid
6. Expected return	High return	Low return
7. Safety	Capital Market instruments are riskier both with respect to return and repayment.	Money market instruments are generally much safer with a minimum risk of default.