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Question : 9
Total: 11
Distinguish between 'Capital Market' and 'Money Market' on the basis of following:
(i) Participants
(ii) Safety
(iii) Investment Outlay
(iv) Expected Return
(i) Participants
(ii) Safety
(iii) Investment Outlay
(iv) Expected Return
Solution:
Difference between 'Capital Market' and 'Money Market'.
| Basis | Capital Market | Money Market |
|---|---|---|
| (i) Participants | Financial institutions, Banks, Corporate entities, Foreign Investors, ordinary retail investors and individuals. | RBI, Banks, Financial institutions and finance companies. (Not including foreign and ordinary retail investors) |
| (ii) Safety | Capital Market Instruments are riskier with respect to return and principle repayment. | Money Market Instruments are generally much safer with a minimum risk of default. |
| (iii) Investment Outlay | Does not require a huge financial outlay. | Entails huge sum of money as the instruments are quite expensive. |
| (iv) Expected Return | High return is seen in Capital market instruments. | Low return is seen in Money market instruments. |
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