{"id":9141,"date":"2021-10-20T19:25:20","date_gmt":"2021-10-20T13:55:20","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=9141"},"modified":"2025-10-09T15:31:26","modified_gmt":"2025-10-09T10:01:26","slug":"distinguish-between-money-market-and-capital-market","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/distinguish-between-money-market-and-capital-market\/","title":{"rendered":"Distinguish Between Money Market and Capital Market (8 Points) | Important Article"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d5f674c5c82\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d5f674c5c82\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/distinguish-between-money-market-and-capital-market\/#Distinguish_Between_Money_Market_and_Capital_Market\" >Distinguish Between Money Market and Capital Market<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/distinguish-between-money-market-and-capital-market\/#Meaning_of_Money_Market\" >Meaning of Money Market<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/distinguish-between-money-market-and-capital-market\/#Meaning_of_Capital_Market\" >Meaning of Capital Market<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/distinguish-between-money-market-and-capital-market\/#Distinguish_Between_Money_Market_and_Capital_Market-2\" >Distinguish Between Money Market and Capital Market<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center has-black-color has-text-color\"><span class=\"ez-toc-section\" id=\"Distinguish_Between_Money_Market_and_Capital_Market\"><\/span><strong>Distinguish Between Money Market and Capital Market<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Distinguish-Between-Money-Market-and-Capital-Market-1024x576.jpg\" alt=\"Distinguish Between Money Market and Capital Market\" class=\"wp-image-9147 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Distinguish-Between-Money-Market-and-Capital-Market-1024x576.jpg 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Distinguish-Between-Money-Market-and-Capital-Market-300x169.jpg 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Distinguish-Between-Money-Market-and-Capital-Market-768x432.jpg 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Distinguish-Between-Money-Market-and-Capital-Market-1536x864.jpg 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Distinguish-Between-Money-Market-and-Capital-Market-640x360.jpg 640w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Distinguish-Between-Money-Market-and-Capital-Market.jpg 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;\" \/><figcaption class=\"wp-element-caption\">Distinguish Between Money Market and Capital Market<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Money_Market\"><\/span><strong>Meaning of Money Market<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>The money market is a market for lending and borrowing of funds for the short term<\/strong>. It is a market wherein lending and borrowing of funds take place for a short period of time which varies from one day to a year. Also, the financial instruments traded in this market can be converted into cash easily without any loss of time and value.<\/p>\n\n\n\n<p>An instrument like commercial paper, liquid and treasury bills etc. are traded in the money market.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Capital_Market\"><\/span><strong>Meaning of Capital Market<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>It is the market for borrowing and lending long-term <a href=\"https:\/\/www.icsi.edu\/media\/webmodules\/publications\/Full%20CC&amp;MM.pdf\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/www.icsi.edu\/media\/webmodules\/publications\/Full%20CC&amp;MM.pdf\" rel=\"noreferrer noopener\">capital<\/a> required by business enterprises.<\/strong> The financial assets dealt with in the capital market have long or indefinite maturity period. The capital market is the core of a country&#8217;s financial system as it helps in the mobilization of resources.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-fixed-capital-and-working-capital\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-fixed-capital-and-working-capital\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Fixed Capital and Working Capital<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-owned-capital-and-borrowed-capital\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-owned-capital-and-borrowed-capital\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Owned Capital and Borrowed Capital<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-debenture-and-share\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Debenture and Share<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-preference-shares-and-equity-shares\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-preference-shares-and-equity-shares\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Preference Shares and Equity Shares<\/a><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Distinguish_Between_Money_Market_and_Capital_Market-2\"><\/span><strong><strong><strong><strong>Distinguish Between Money Market and Capital Market<\/strong><\/strong><\/strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Points<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong><strong>Money Market<\/strong><\/strong><\/strong><\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong><strong>Capital Market<\/strong><\/strong><\/strong><\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1) Meaning<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is a component of the financial<br>market where short-term borrowing takes place.<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is a component of financial market where long-term borrowings takes place.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Time period<\/td><td class=\"has-text-align-center\" data-align=\"center\">In money market, the instruments<br>traded have maturity period of one year or less than one year.<\/td><td class=\"has-text-align-center\" data-align=\"center\">In capital market, the instruments<br>traded have maturity period of more than one year.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">3) Instruments<\/td><td class=\"has-text-align-center\" data-align=\"center\">Certificate of deposits, Repurchase<br>agreements, Commercial paper,<br>Treasury bills, etc. are the instruments traded in the money market.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Stocks, Shares, Debentures, Bonds,<br>Securities of the government are the instrument of capital market.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">4) Purpose of borrowing<\/td><td class=\"has-text-align-center\" data-align=\"center\">Funds are borrowed to meet working capital requirements or for small investments.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Long term funds are required to<br>establish new business, expand or<br>diversify business or purchase of<br>fixed assets.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">5) Institutions<\/td><td class=\"has-text-align-center\" data-align=\"center\">Participants in the market are Central banks, Commercial banks, Acceptance houses, Non-bank financial institution, Bill brokers, etc.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Stock exchanges, Commercial<br>banks and Non-bank institutions,<br>financial intermediaries, etc. are the participants in the market.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">6) Risk<\/td><td class=\"has-text-align-center\" data-align=\"center\">In the money market, risk factor is<br>very less because maturity period of the instruments is less than one year.<\/td><td class=\"has-text-align-center\" data-align=\"center\">In capital market, the risk is more as compared to in the money market. The reason behind this is the instruments have long maturity period.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">7) Return on Investment<\/td><td class=\"has-text-align-center\" data-align=\"center\">Return on investment in money<br>market is less as they are highly<br>liquid and safe.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Return on investment in capital<br>market is comparatively high as they are more risky.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">8) Role in Economy<\/td><td class=\"has-text-align-center\" data-align=\"center\">This market increases liquidity of<br>funds in the economy.<\/td><td class=\"has-text-align-center\" data-align=\"center\">This market helps in mobilization of savings in the economy.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dematerialisation-and-rematerialisation\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dematerialisation-and-rematerialisation\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference between Dematerialisation and Rematerialisation<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-final-dividend-and-interim-dividend\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-final-dividend-and-interim-dividend\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Final dividend and Interim Dividend<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Dividend and Interest<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-primary-and-secondary-market\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Primary and Secondary Market<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/distinguish-between-money-market-and-capital-market\/\">Distinguish Between Money Market and Capital Market<\/a><\/li>\n<\/ul>\n\n\n\n<p><strong>Learn the chapters on TYBCOM from our <a href=\"https:\/\/studio.youtube.com\/channel\/UCExY0hxogv75WdPK1MFS3fw\" data-type=\"link\" data-id=\"https:\/\/studio.youtube.com\/channel\/UCExY0hxogv75WdPK1MFS3fw\" target=\"_blank\" rel=\"noopener\">YouTube channel<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":9147,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[10],"tags":[3389],"class_list":["post-9141","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-educational-blogs","tag-distinguish-between-money-market-and-capital-market"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/9141","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=9141"}],"version-history":[{"count":6,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/9141\/revisions"}],"predecessor-version":[{"id":39668,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/9141\/revisions\/39668"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/9147"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=9141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=9141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=9141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}