Distinguish between Money market and Capital Market on the basis of: (a) Participants (b) Instruments
Distinguish between Money market and Capital Market on the basis of:
(a) Participants (b) Instruments (c) Safety and (d) Expected return.
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| Basis | Capital Market | Money Market |
| Participants | The participants are financial institutions, banks, corporate, foreign investors and retail investors. | The participants are RBI, financial institutions, banks, corporate. |
| Instruments | Instruments traded are shares, debentures and bonds. | Instruments traded are treasury bill, commercial paper, certificates of deposit, call money and commercial bill. |
| Expected return | The investment in capital markets generally yields a higher return | The expected rate of return of the money market is less. |
| Security/Safety | Capital market instruments are risky with respect to returns and principal repayment. | Money market instruments are generally much safer with a minimum risk of default |
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