Question

'Money market instruments are more liquid than capital market instruments'. Comment.

Answer 1

Money market instruments are more liquid than capita market instruments. The financial market is a place where investors deal in financial instruments. It provides a vehicle for allocation of savings to investment. It can be grouped as money market and capital market. Both the markets are very important in the financial sector. In the money market, extremely liquid financial instruments are traded, i.e. monetary instruments of short-term nature are dealt. On the contrary, the capital market is for long term securities. It is a market for those securities which have direct or indirect claims to capital.