Basics of Money Market and Capital Market: Banking Awareness Special Series

Team Adda247 and Bankers Adda have introduced a Special Banking Awareness series for SBI and IBPS Interviews 2021. In this series, we will be introducing the candidates with some banking awareness topics  On a daily basis that will improve their general awareness and will also ensure that the candidates do not lack in any banking term when it comes to the interview round. Today the topic of our Banking Awareness Series is Basics of Money Market and Capital Market. To know more about this banking awareness special series click on the link below:

Banking Awareness Special Series for SBI & IBPS Interviews 2021

Basics of Money Market and Capital Market

Money Market: In the Money Market Governments, Corporations, Banks, and Financial Institutions are borrowing and lending a constant flow of cash between them for a short-term basis i.e. for overnight to less than a year.

The money market is generally used by individuals, banks, other companies, and governments to park cash for a short period of time, usually one year or less. It provides businesses and governments who need funds to operate can get it quickly at a reasonable cost, and so that businesses that have more cash than they need can put it to use.

Capital Market: Capital Market provides a platform to Governments, Corporations, Banks, Financial Institutions, and Companies to issue Bonds or Shares for obtaining funds for the long term as well as the short term also.

Any Individuals, FIIs (Foreign Institutional Investors), DIIs (Domestic Institutional Investors), HUF (Hindu Undivided Family), Mutual Funds, etc. could invest their money for the short term or long term. 

Capital Market consists mainly of two markets (i) Primary market and (ii) Secondary market

1. i) Primary Market: Whenever a listed Company offers bonds or shares directly to investors for the first time it is done in the Primary market.
2. ii) Secondary Market: After offerings of Bonds or Shares in the Primary market, they will be traded in the secondary market.