Differentiate between money market and capital market.
Understand the Problem
The question is asking for a comparison between the money market and the capital market, focusing on their definitions, functions, and characteristics.
Answer
The money market deals with short-term debt; the capital market involves long-term investments in stocks and bonds.
The money market deals with short-term debt and lending for liquidity needs, while the capital market involves long-term investments in stocks, bonds, and other securities.
Answer for screen readers
The money market deals with short-term debt and lending for liquidity needs, while the capital market involves long-term investments in stocks, bonds, and other securities.
More Information
The money market is considered safer due to its focus on short-term, liquid financial instruments. In contrast, the capital market involves higher risk with the potential for higher returns, as it focuses on long-term securities.
Tips
Mistaking the duration and type of financial instruments for both markets can lead to confusion. Remember, the money market is for short-term liquidity, while the capital market is for long-term investments.
Sources
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