Question

Distinguish on any six basis between capital market and money market.

Answer 1

$\begin{array}{ccc}\text{Basis}& \text{Capital Market}& \text{Money Market}\\ \text{Meaning}& \text{Capital market is an organised}& \text{Money market is the debt market}\\ & \text{Mechanism for effective and}& \text{that allows flow of money by}\\ & \text{smooth transfer of long-term}& \text{means of borrowing and lending in}\\ & \text{capital.}& \text{the short-term}.\\ \text{Purpose}& \text{To raise funds from sale /}& \text{Used for short-term basis for assets}\\ \text{purchase of debt equity.}& \text{with maturity up to one year.}& \\ \text{Participants}& \text{Financial institutions, banks,}& \text{RBI, large corporations, govern-}\\ \text{corporations, foreign investors,}& \text{ments, commercial banks, etc.}& \\ \text{Individual investors.}& & \\ \text{Instruments}& \text{Equities, notes, bondsd deben}-& \text{T-bill,s call money, commercial}\\ \text{traded}& \text{tures, mutual funds, etc.}& \text{bill, commercial papers, certificates of deposits.}\\ \text{Liquidity}& \text{Liquidity is subjective but restricted.}& \text{Highly liquid as purchase / sale of instruments are in large denominations.}\\ \text{Regulatory bodies}& \text{SEBI}& \text{RBI}\end{array}$