In terms of the life of securities offered what is the difference betwen money and capital markets?

Asked on by soman2006

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The major difference between these two markets is the maturity dates of the instruments involved.  The money market consists of dealings in very short term securities.  These securities can have maturity dates as short as a single day.  The securities typically mature in about three months and very rarely mature in more than a year.

By contrast, capital markets trade in long term securities.  These can be bonds that will not mature for a relatively long time like US 30 year treasury bonds.  These can also be stocks which, of course, have no maturity dates.

In terms of the life of the securities issued, then, money markets are for much shorter term securities than capital markets.

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