What is meant by 'Capital Market'?
Differentiate between 'Capital Market' and 'Money Market' on any four bases.

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Solution

Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and Institutions. Capital market consists of primary markets and secondary markets. Primary markets deal with trade of new issues of stocks and other securities, whereas secondary market deals with the exchange of existing or previously-issued securities. Another important division in the capital market is made on the basis of the nature of security traded, i.e. stock market and bond market.d institutions.
The difference between both the market are as follows:
Basis for comparison Capital Market Money Market
Meaning A section of financial market where long term securities are issued and traded. A segment of the financial market where lending and borrowing of short term securities are done.
Financial Instruments Shares, Debentures, Bonds, Retained Earnings, Asset Securitization, Euro Issues etc. Treasury Bills, Commercial Papers, Certificate of Deposit, Trade Credit etc.
Institutions Commercial banks, Stock exchange, non-banking institutions like insurance companies etc. Central bank, Commercial bank, non-financial institutions, bill brokers, acceptance houses, and so on.
Risk Factors Comparatively high Low

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