Money market and Capital Market

The money market and capital market are both integral parts of the financial system but serve different purposes. The *money market* deals with short-term borrowing and lending, typically for periods of less than one year. It facilitates liquidity and short-term funding needs for financial institutions, governments, and corporations through instruments like treasury bills, commercial paper, and certificates of deposit.

On the other hand, the *capital market* focuses on long-term investments. It enables businesses and governments to raise funds for longer durations, usually beyond one year. The capital market includes instruments such as stocks (equities) and bonds (debt securities), where investors trade in the expectation of generating returns over the medium to long term. Both markets play crucial roles in the overall economy by channeling savings into productive investments and providing avenues for investors to manage risks and earn returns according to their investment horizons.