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Answer» Difference between Capital Market and Money Market : | Basis of Difference | Capital Market | Money Market | | (i) Participants | Financial institutions, banks, corporate bodies, foreign investors and ordinary public. | RBI, banks, financial institution sand finance companies are the main participants. | | (ii) Instruments Traded | Equity shares, preference shares,debentures, bonds, etc. | Call loans, treasury bill, commercial bills, commercial papers, certificates of deposit, etc. | | (iii) Duration | Period of maturity is more than one year. | Period of maturity ranges from one day to one year. | | (iv) Investment Outlay | The value of units of securities is generally low, i.e., Rs. 10, Rs. 100, etc. | These instruments are of large amount, e.g., the minimum amount of Call Loan is Rs. 10 crores. | | (v) Liquidity | Only actively traded securities have ready market. Hence, there is no guarantee of liquidity in the securities of all companies. | In this market, there is a formal arrangement of creating liquidity.The Discount Finance House of India (DFHI) has been established for this purpose. It is always ready to provide ready market for money market instruments. | | | Hence, there is maximum liquidity in this market. |
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