The document compares money markets and capital markets. Money markets deal in short-term debt investments between institutions and retail investors, and are used by participants to lend and borrow high-quality debt securities with maturities of one year or less. Capital markets raise capital through equities and long-term debt instruments, bringing together investors and companies seeking capital, and providing a secondary market for trading securities. Both markets serve important functions for issuers seeking funding and investors with different risk tolerances and time horizons.

2. Money Market
Vs.
Capital Market
What's the Difference?

3. Overview
A financial market brings buyers and
sellers together to trade in financial assets
such as stocks, bonds, commodities, and
currencies. The purpose of a financial
market is to set prices for global trade,
raise capital, and transfer liquidity and
risk. Two of the most commonly used
are money markets and capital markets.

4. Money Market
The money market is the trade in short-term debt
investments. At the wholesale level, it involves
large-volume trades between institutions and
traders. At the retail level, it includes money
market mutual funds bought by individual
investors and money market accounts opened by
bank customers.

5. How does a money market
work?
A money market account is a type of savings
account offered by banks and credit unions just like
regular savings accounts. The difference is that they
usually pay higher interest, have higher minimum
balance requirements (sometimes $1000-$2500),
and only allow three to six withdrawals per month.

6. What is the purpose of
money markets?
The money market is an organized
exchange market where participants can lend and
borrow short-term, high-quality debt securities with
average maturities of one year or less.
The market enables governments, banks, and other
large institutions to sell short-term securities.

7. What are the types of
money market?
• Treasury Bills (T-Bills)
• Call and Notice Money. ...
• Inter-bank Term Market. ...
• Commercial Papers (CPs)
• Certificate of Deposits ( CD's )
• Banker's Acceptance (BA)

8. Capital Markets
The part of a financial
system concerned with
raising capital by dealing in
shares, bonds, and other
long-term investments.

9. What is an example of a
capital market?
• Capital market instruments used for market trade
include stocks and bonds, treasury bills, foreign
exchange, fixed deposits, debentures, etc. As they
involve debts and equity securities, the instruments
are also called securities, and the market is referred
to as securities market.

10. What is the purpose of
capital markets?
Capital markets serve two purposes. Firstly, they
bring together investors holding capital and
companies seeking capital through equity and debt
instruments. Secondly, and almost more importantly,
they provide a secondary market where holders of
these securities can exchange them with one another
at market prices.

11. How does capital market
work?
This is unlike trading securities or available for
sale securities, where companies don't usually
hold on to securities until they reach maturity..
Corporate bonds are a debt instrument, with
the issuing company receiving money from
investors, to be used towards the company's
expenses.

13. The Bottom Line
• There are both differences and similarities between
capital and money markets.
From the issuer or seller's standpoint, both markets
provide a necessary business function: maintaining
adequate levels of funding. The goal for which sellers
access each market varies depending on their liquidity
needs and time horizon.

14. The Bottom Line
• Similarly, investors or buyers have unique reasons for
going to each market: capital markets offer higher-
risk investments, while money markets offer safer
assets; money market returns are often low but
steady, while capital markets offer higher
returns. The magnitude of capital market returns
often has a direct correlation to the level of risk, but
that's not always the case.