Distinction between capital market and money market?

Answer 1

The key distinguishing feature between the money and capital markets is the maturity period of the securities traded in them. The money market refers to all institutions and procedures that provide for transactions in short-term debt instruments generally issued by borrowers with very high credit ratings. By financial convention, short-term means maturity periods of one year or less. Notice that equity instruments, either common or preferred, are not traded in the money market. The major instruments issued and traded are U.S. Treasury bills, various federal agency securities, bankers" acceptances, negotiable certificates of deposit, and commercial paper. Keep in mind that the money market is an intangible market. You do not walk into a building on Wall Street that has the words "Money Market" etched in stone over its arches. Rather, the money market is primarily a telephone and computer market.

The capital market refers to all institutions and procedures that provide for transactions in long-term financial instruments. Long-term here means having maturity periods that extend beyond one year. In the broad sense, this encompasses term loans and financial leases, corporate equities, and bonds. The funds that comprise the firm's capital structure are raised in the capital market. Important elements of the capital market are the organized security exchanges and the over-the-counter markets.

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Answer 2

Capital market is a market which includes securities with maturity period more than one year but bond market includes securities with fixed interest rate i.e. securities with fixed rate of return irrespective of any time limit of maturity.

Answer 3

The key distinguishing feature between the money and capital markets is the maturity period of the securities traded in them. The money market refers to all institutions and procedures that provide for transactions in short-term debt instruments generally issued by borrowers with very high credit ratings. By financial rule, short-term means maturity periods of one year or less. While the capital market refers to all institutions and procedures that provide for transactions in long-term financial instruments. Long-term here means having maturity periods of more than one year (Keown - Martin - Petty - Scott, 2005, p. 486).

Answer 4

A capital market is a market that is for the trading of financial securities between buyers and sellers. Whereas a securities market is a market where securities trading is done by stockbrokers.

Answer 5

Money market is primarily a market for short term funds. Generally the maturity is within an year and more commonly it is overnight. The types of securities traded in money market are

Treasury Bills

Commercial Papers

Repos

Bankers Acceptance etc

This market is primarily for banks and other primary dealers.

On the other hand Capital market is a long term financial market and generally the following securities are involved

Bonds

Stocks

There is a primary market and secondary markets for capital markets. Companies participate in capital markets to secure funds for their capital expansion etc..

Answer 6

Money market is a short term (normally securities issued for a period of 360 (365)days or less.) whereas the capital market securities have longer life span.. in some cases like equity perennial.

Answer 7

Capital market is stock exchange. It trades stocks and bonds.

Money market's main object of trading is curency.

Answer 8

The Stock Market is a subset of the Capital Market.

Answer 9

The money market deals in the lending and borrowing of short-term finance

capital market deals in the lending and borrowing of long-term finance

Answer 10

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