Question: Describe and evaluate the differences between
capital markets and money markets with including
instruments in brief with relevant examples.
Answer:
Capital market: A kind of financial market where the company or government securities are
generated and patronized with the intention of establishing long-term finance to coincide the
capital necessary is called Capital Market. In this market, the buyers use funds for longer-
term investment. The nature of the capital market is risky markets. Therefore, it is not used
for short-term funds investment. Most of the investors obtain the capital markets to preserve
for education or retirement.
The capital Market is divided into two major categories:
➢ Primary Market: A market where fresh securities are offered to the public for
subscription is known as Primary Market.
➢ Secondary Market: A market where already issued securities are traded among
investors is known as Secondary Market.
Money market: A random course of financial institutions, bill brokers, money dealers,
banks, etc., wherein dealing on short-term financial tools are being settled is referred to as
Money Market. These markets are also called wholesale markets. Money Market securities
