{"id":250281,"date":"2024-06-10T00:00:35","date_gmt":"2024-06-10T00:00:35","guid":{"rendered":"https:\/\/imarticus.org\/?p=250281"},"modified":"2024-06-11T11:50:25","modified_gmt":"2024-06-11T11:50:25","slug":"what-are-capital-markets-and-how-are-they-different-from-the-money-market","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/what-are-capital-markets-and-how-are-they-different-from-the-money-market\/","title":{"rendered":"What are Capital Markets and How are They Different From the Money Market?"},"content":{"rendered":"

The global financial system has two broad components in the form of capital markets and money markets. For investors, both markets have different purposes. The <\/span>money market and capital market difference<\/span> is that the money market is the place for lending and short-term debt, and the capital market is for long-term assets like bonds and stocks.\u00a0<\/span><\/p>\n

As per financial valuation, the capital market might be risky but is more rewarding. However, the money market is a safer alternative if you want to park your money safely.\u00a0<\/span><\/p>\n

For developing an understanding of the global financial market, it becomes imperative to gauge the <\/span>money market and capital market differences<\/span>. Undertaking a Financial Services course can prove to be helpful in this case.\u00a0<\/span><\/p>\n

What is the money market?<\/b><\/h2>\n

Also known as the wholesale market, the money market is an excellent place to park cash for a short time span, generally for a year or less. This market is ideal for banks, companies, financial institutions, the government, and individuals looking for short-term lending. Businesses that need cash can quickly borrow it at reasonable rates from the money market.\u00a0<\/span><\/p>\n

The money market operates through various instruments, some of the most common ones being collateral loans, certificates of deposits, bills of exchange, bankers' acceptances, and so on. Commercial banks, the Federal Reserve, and acceptance houses are some common institutions which operate in the money market.\u00a0<\/span><\/p>\n

\"financial<\/p>\n

What is the capital market?<\/b><\/h2>\n

In the financial market, the capital market is the place reserved for long-term debt instruments trading<\/strong><\/a>. It is the place for trading bonds and stocks. Financial experts monitor and analyse capital markets closely for understanding the condition of the economy at large, including the status of the various industries in them.\u00a0<\/span><\/p>\n

The main aim of business organisations entering the capital market is to raise funds for long-term purposes. Two of the main reasons include increasing the revenues of the business and business expansion. Businesses raise capital by issuing long-term securities, corporate bonds and shares of stock. One of the <\/span>money market and capital market differences<\/span> is that the risks involved in the capital market are way higher than in the money market, but they are potentially more rewarding.\u00a0<\/span><\/p>\n

There are two vital categories in the capital market:<\/span><\/p>\n