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Question

Why are money market instruments more liquid as compared to capital market instruments ?

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Solution

Mioney market instruments are more liquid, as whenever an investor wants to encash the securities of mnoey market, the Discount and Finance House of India provides a ready market.

Whereas, the capital market enjoys lesser liquidity and the securities may be less traded in the securities market. Thus, money market instruments are more liquid and may be encashed any time.


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