Q.Distinguish between money market and capital market.

A financial market channels savings into investment by enabling the buying and selling of financial securities (shares, bonds, debentures) and derivatives at low cost.

A financial market performs the vital function of mobilising savings and allocating them to productive uses. Its key features:

• It deals in financial securities — equity shares, preference shares, debentures, bonds, government securities — and in derivatives such as futures and options.
• It enables trading at low transaction costs and provides liquidity, price discovery and easy transfer of funds. …