An Idea On Similarities Between Money Market And Capital Market (2024)

The Money Market and Capital Market both are very important in the international finance market. The money markets are the trading of debt investments for a very short term. Whereas, capital markets are the places where sellers and buyers can buy or sell things (such as institutions & individuals). Capital markets are long-term investments and provide purchase debt securities. The governments and businesses are dependent on both markets for getting the needed money for operations. This study talks about the stocks and bonds in both markets, the system of borrowing or lending money, & capital markets in both markets etc.

Stocks and Bonds between Money market & Capital market

The stock refers to the equity investment whereas the bond refers to the debt investment. The holder of stocks is considered the owner and the lender who is taking the debt is the bondholder. Stocks are partial ownerships that can be bought in both the Money market & Capital market. The stock bought in the money market is valid for a short time like one night or one year. The stock bought from the capital market is assigned for a long time. The stockholder holds the stock until the stock is invalid under the conditions assigned. Both types of markets buy or sell stocks and bonds for a billion dollars of money. Both types of markets are intangible and the trading usually occurs through computerised trading stations. The capital market provides long-term financial securities such as stocks, bonds, and so on. The money market provides short term financial agreements on stocks and bonds with a short period and a payback facility after that period. The capital market’s participants are both individual and institutional investors.

Borrowing and Lending money and Capital funds in both types of market

Borrowing and lending money in a money market occurs simply and easily with a payback guarantee. The capital market does not provide borrowing or lending money. The money market borrowing and lending can be taken or given over billions of rupees for a short time of period. The capital market borrowing or lending money is done through buying or selling bonds and stocks for a long term of time over billions of rupees.

The capital fund is given by the supplier of capital in terms of buying financial bonds and stocks from the one who needs the money. Both the capital and money market exchange a large number of capital funds. Lenders and borrowers are lending and borrowing the short-term capital funds with short-term security. The capital market allows borrowing and lending a large amount of money for a long term of time with long-term security. The capital market gives the opportunity for borrowing and lending a large amount of money for a long term of time with a long-term security.

Similarities between Money market and Capital market

The key components of the international market are the money market and the capital market. Both the money and capital markets facilitate participants to buy debt securities. Debt securities are financial products where the borrower promises the lender to pay back the debt amount. Other types of money markets and securities are also exchanged in the capital market. A high amount of rupees is exchanged daily in both types of markets. The expanded activities of the government or any business activity is paid for through lending money from both types of markets. Even the capital needed for operations of government or business is sometimes borrowed from both types of markets depending on the time. Both the markets do not exchange stocks and bonds offline or hand to hand. These usually exchange money through some particular online platforms.

Conclusion

Both the capital and money market are very important aspects of the international market. Though there are many differences between both types of markets, both markets provide the facilities to get or use capital funds based on participants’ interests. Lending or borrowing money from the capital market will give a long period to pay back the money. The money market does not provide a long period but provides as large capital as the capital market. Stocks and bonds can be bought in both types of the market with debt security for a particular period.