Difference Between Money Market and Capital Market
Thursday, September 24, 2009
Capital Market is term used for the physical trading of capital instruments like equities, bonds, derivatives etc. This market always physically exists and the best example is Stock Exchange.
A capital market is a market for securities (both debt and equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is lent for periods longer than a year[1], as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Financial regulators, such as the UK's Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties.
Capital markets consist of the primary market and the secondary market. The primary markets are where new stock and bonds issues are sold (via underwriting) to investors. The secondary markets are where existing securities are sold and bought from one investor or trader to another, usually on a securities exchange, over the counter, or elsewhere.
Hope this clarifies
The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods of time, typically up to thirteen months. Money market trades in short-term financial instruments commonly called "paper." This contrasts with the capital market for longer-term funding, which is supplied by bonds and equity
posted @ 11:35 AM,
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