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These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed the most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this, there is another market in which unsecured and short term debt instruments are actively traded everyday.
These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.
These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.
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Question : 20
Total: 32
Name the market segment other than the capital market segment in which unsecured and short-term debt instruments are traded. Also, give any three points of difference between the two.
Solution:
The market segment other than the capital market segment is 'Money Market'.
Difference between capital market and money Market:
Difference between capital market and money Market:
| Basis | Money Market | Capital market |
|---|---|---|
| (i) Participation | The participants are financial institution, bank, public and private companies. Individual and foreign investors are not allowed. | The participants are financial institutions bank, public and private company, individuals foreign investors etc. |
| (ii) Duration | Short term, maximum duration is 1 year. | Medium and long term securities (more than 1 year). |
| (iii) Instruments | Treasury bill, trade bill certificate of deposits, commercial paper etc. | Equity share, debenture, bonds and other innovative securities. |
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