CBSE 2025, BS Set 1

Question

Give the meaning of 'Capital Market'. Differentiate between 'Capital Market' and 'Money Market' on the basis of the following:

(i) Participants

(ii) Instruments

Edvaya · Accepted Answer

The correct answer is Subjective. **Meaning of Capital Market:**
Capital Market is a market for long-term funds where financial instruments with a maturity period of more than one year (or no fixed maturity, like equity shares) are traded. It includes both the primary market (new issues) and secondary market (trading of existing securities). Examples of instruments: equity shares, preference shares, debentures, bonds.

**Differences between Capital Market and Money Market:**

| Basis | Capital Market | Money Market |
|---|---|---|
| **(i) Participants** | Commercial banks, insurance companies, mutual funds, foreign institutional investors (FIIs), individual investors, corporations | Reserve Bank of India (RBI), commercial banks, non-banking finance companies (NBFCs), corporations, government |
| **(ii) Instruments** | Equity shares, preference shares, debentures, bonds, government securities (long-term) | Treasury bills (T-bills), commercial paper, call money, certificates of deposit, commercial bills |

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