Difference Between Money Markets and Capital Markets
Finance |
---|
Financial markets
|
Financial instruments
|
Corporate finance
|
Personal finance
|
Public finance
|
Banks and banking
|
Financial regulation
|
Standards
|
Economic history
|
The Money markets are used for the raising of short term finance, sometimes for loans that are expected to be paid back as early as overnight. Whereas the Capital markets are used for the raising of long term finance, such as the purchase of shares, or for loans that are not expected to be fully paid back for at least a year.
Funds borrowed from the money markets are typically used for general operating expenses, to cover brief periods of illiquidity. For example a company may have inbound payments from customers that have not yet cleared, but may wish to immediately pay out cash for its payroll. When a company borrows from the primary capital markets, often the purpose is to invest in additional physical capital goods, which will be used to help increase its income. It can take many months or years before the investment generates sufficient return to pay back its cost, and hence the finance is long term.
Together, money markets and capital markets form the financial markets as the term is narrowly understood.
Read more about this topic: Capital Market
Famous quotes containing the words difference between, difference, money, markets and/or capital:
“The difference between people isnt in their class, but in themselves. Only from the middle classes one gets ideas, and from the common peoplelife itself, warmth. You feel their hates and loves.”
—D.H. (David Herbert)
“The only difference between a man and woman climbing the ladder of success is that a woman is expected to put it in the closet when shes finished with it.”
—Barbara Dale (b. 1940)
“I know the ice in your drink is senile.
I know your smile will develop a boil.
You know only that you are on top,
swinging like children on the money swing....”
—Anne Sexton (19281974)
“A free-enterprise economy depends only on markets, and according to the most advanced mathematical macroeconomic theory, markets depend only on moods: specifically, the mood of the men in the pinstripes, also known as the Boys on the Street. When the Boys are in a good mood, the market thrives; when they get scared or sullen, it is time for each one of us to look into the retail apple business.”
—Barbara Ehrenreich (b. 1941)
“We saw the machinery where murderers are now executed. Seven have been executed. The plan is better than the old one. It is quietly done. Only a few, at the most about thirty or forty, can witness [an execution]. It excites nobody outside of the list permitted to attend. I think the time for capital punishment has passed. I would abolish it. But while it lasts this is the best mode.”
—Rutherford Birchard Hayes (18221893)