The following points highlight the difference between Capital Market and Money Market.
| Basis of Difference |
Capital Market |
Money Market |
| Time Span of Securities |
Capital Market mainly deals in the trading of medium and long-term securities wherein, the maturity period is more than one year. |
Money Market deals in the trading of short-term securities wherein, the maturity period can vary from one day to a maximum of one year. |
| Liquidity |
Capital market securities are liquid in nature as they are tradable on stock exchanges, but are less liquid in comparison to the money market securities. |
The securities traded are highly liquid in nature. DFHI discounts money market securities and offers a ready market for them. |
| Returns Expected |
Expected returns are higher due to the possibility of capital gains in long-term and regular dividends or bonus. |
Expected returns are lower due to shorter duration. |
| Instruments |
Instruments traded in capital market comprise of equity shares, preference shares, debentures, bonds and other long term securities. |
Instruments traded in money market comprise of treasury bills, commercial bills, certificate of deposits and other short-term securities. |
| Risk |
Capital market securities involve greater risk in terms of repayment of the principal amount. |
Money market securities are less risky due to short time period and sound financial position of the issuers. |
