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When discussing financial markets, we use several distinctions classifying those (e.g. money markets versus capital markets)....

When discussing financial markets, we use several distinctions classifying those (e.g. money markets versus capital markets). Briefly discuss each of those categorical juxtapositions, including specific examples for illustration!

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Answer #1

Distinctions between money market vs capital market
1. Money market is for short term whereas Capital market is for long term. Hence more liquidity is there in money market.
2. Money markets have less risk and help in assured payment whereas Capital Markets are more risky and hence provide higher return than money markets.
3. Money market instruments are deposits, collateral bills of exchange,etc whereas capital markets include bonds and stocks.
4. Money market is used to finance working capital by companies whereas capital market is used for capital and long term investments.
5. Treasury bills , CDS are all money market instruments whereas long terms bonds, stocks of companies like APPLE, Google are all part of capital markets.

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