The document compares and contrasts money markets and capital markets. Money markets deal in short term instruments of up to one year, such as bills and commercial paper, to fulfill short term credit needs. They involve banks and have high liquidity and low risk. Capital markets deal in long term instruments like stocks and bonds, to fulfill long term credit needs. They have lower liquidity, higher risk, and higher potential returns due to longer maturity periods.

1. Money Market vs Capital Market
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2. Index
1. Definition
2. Types of instruments involved
3. Institutions & Types of investors
4. Nature of Market
5. Liquidity of the market
6. Maturity period
7. Risk factor
8. Purpose
9. Functional merit
10. Return on investment(ROI)
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3. 1. Definition
Money Market is part of
financial market where
lending and borrowing
takes for short tem upto
one year
Capital Market is part of
financial market where
lending and borrowing
takes for medium and
long term
1. Definition
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4. 1. Definition
Money Market
generally deals in
promissory notes, bills
of exchange,
commercial paper,
Treasury bills, etc.
2. Types of instruments involved
Capital Market deals in
Equity shares,
debentures, bonds,
preference shares, etc.
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5. 1. Definition
Money Market contains
financial banks, central
bank, commercial banks,
financial companies,
chit funds
3. Institutions & Types of investors
Capital Market involves
stock brokers, individual
investors, commercial
banks, stock exchanges,
insurance companies
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6. 1. Definition
Money Markets are
informal
4. Nature of Market
Capital Markets are
more formal.
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7. 1. Definition
Money Markets
are more
liquid transactions
5. Liquidity of the market
Capital Markets
are less
liquid transactions .
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8. 1. Definition
Money Markets
are generally up to 1
year maturity
6. Maturity Period
Capital Markets
are long term and do
not have stipulated time
frame.
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9. 1. Definition
Money Markets
are liquid and less
maturity, Risk is Low.
7. Risk factor
Capital Markets
Due to less liquid and
long maturity, Risk is
High.
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10. 1. Definition
Money Markets
To fulfil short-term
credit needs of the
business
8. Purpose
Capital Markets
To fulfil long-term credit
needs of the business
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11. 1. Definition
Money Markets
Increase the liquidity of
funds in Economy
9. Functional Merit
Capital Markets
Stabilizes the Economy
due to long-term
savings
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12. 1. Definition
Money Markets
Returns are very low
compared with Capital
market
10. Return on Investment
Capital Markets
Returns are very high
because of longer
maturity
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