Capital Market - Difference Between Money Markets and Capital Markets

Difference Between Money Markets and Capital Markets

Finance
Financial markets
  • Bond market
  • Commodity market
  • Derivatives market
  • Foreign exchange market
  • Money market
  • Over the counter
  • Private equity
  • Real estate
  • Spot market
  • Stock market
  • Financial market participants:
  • Investor and speculator
  • Institutional and retail
Financial instruments
  • Cash:
  • Deposit
  • Derivative
  • Exotic option
  • Futures contract
  • Loan
  • Option (call or put)
  • Security
  • Stock
  • Time deposit or certificate of deposit
Corporate finance
  • Accountancy
  • Audit
  • Capital budgeting
  • Credit rating agency
  • Financial risk management
  • Financial statement
  • Leveraged buyout
  • Mergers and acquisitions
  • Structured finance
  • Venture capital
Personal finance
  • Credit and debt
  • Employment contract
  • Financial planning
  • Retirement
  • Student financial aid in the United States
Public finance
  • Government spending:
  • Government final consumption expenditure
  • Government operations
  • Redistribution of wealth
  • Transfer payment
  • Government revenue:
  • Taxation
  • Deficit spending
  • Government budget
  • Government budget deficit
  • Government debt
  • Non-tax revenue
  • Warrant of payment
Banks and banking
  • Central bank
  • Deposit account
  • Fractional reserve banking
  • Lists of banks
  • Loan
  • Money supply
Financial regulation
  • Professional certification in financial services
  • Accounting scandals
Standards
  • ISO 31000
  • International Financial Reporting Standards
Economic history
  • History of private equity and venture capital
  • Recession
  • Stock market bubble
  • Stock market crash

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 isn’t in their class, but in themselves. Only from the middle classes one gets ideas, and from the common people—life 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 she’s 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 (1928–1974)

    “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 (1822–1893)