The money market and the capital market are two different financial markets that serve different purposes and involve different types of financial instruments.
The money market is a financial market that deals with short-term borrowing and lending of funds, typically for periods of less than one year. It is a wholesale market that is used by banks, financial institutions, and large corporations to borrow and lend money in the form of short-term debt securities, such as commercial paper and certificates of deposit (CDs). The money market is considered to be a low-risk market because the instruments traded in it are considered to be very stable and liquid.
The capital market, on the other hand, is a financial market that deals with long-term borrowing and lending of funds, typically for periods of more than one year. It is a market for buying and selling securities, such as stocks, bonds, and other financial instruments, that represent ownership in a company or a claim on its future earnings. The capital market is used by companies to raise capital for expansion, research and development, and other investments, as well as by investors to buy and sell securities. The capital market is considered to be more risky than the money market because the instruments traded in it are typically less stable and less liquid.
In summary, the money market is a market for short-term borrowing and lending of funds, while the capital market is a market for buying and selling securities that represent ownership in a company or a claim on its future earnings.
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