Definition of Money Market and Capital Market

  • Money market basically refers to a section of the financial market where financial instruments with high liquidity and short-term maturities are traded
  • It is a component of the financial market for buying and selling of securities of short-term maturities, of one year or less, such as treasury bills and commercial papers
  • Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions
  • This is the long-term financial market of an economy, where capital are raised for a period of minimum 365 days and above