(a) Differentiate between money market and capital market (any 5).

OR

(b) Distinguish between conditions and warranty.

Question

(a) Differentiate between money market and capital market (any 5).

OR

(b) Distinguish between conditions and warranty.

Accepted Answer

>

> [!TLDR]
> (a) The money market provides short-term funds through instruments like T-bills, commercial paper and call money, whereas the capital market provides long-term funds through shares, debentures and bonds; they differ in duration, instruments, institutions and risk. (b) A condition is essential to the main purpose of a contract of sale and its breach allows repudiation, while a warranty is collateral and its breach allows only a claim for damages.
>
> ## (a) Money market versus capital market
>
> | Basis | Money Market | Capital Market |
> |---|---|---|
> | Meaning / duration | Market for short-term funds (up to one year) | Market for medium and long-term funds (above one year) |
> | Instruments | Treasury bills, commercial paper, certificates of deposit, call money | Equity shares, preference shares, debentures, bonds |
> | Institutions | RBI, commercial banks, discount houses | Stock exchanges, SEBI, financial institutions, mutual funds |
> | Purpose | Meets working-capital / short-term needs | Meets fixed-capital / long-term investment needs |
> | Risk and return | Low risk, low return | Comparatively higher risk and higher return |
> | Liquidity | Highly liquid | Comparatively less liquid |
>
> ## (b) Conditions versus warranty
>
> Under the Sale of Goods Act, 1930:
>
> | Basis | Condition | Warranty |
> |---|---|---|
> | Meaning | An essential stipulation, forming the main purpose of the contract | A subsidiary/collateral stipulation, not central to the contract |
> | Importance | Of primary importance | Of secondary importance | …

Q.(a) Differentiate between money market and capital market (any 5).

Concept understanding — Money Market versus Capital Market

(a) Money market versus capital market

(b) Conditions versus warranty

Basis	Money Market	Capital Market
Meaning / duration	Market for short-term funds (up to one year)	Market for medium and long-term funds (above one year)
Instruments	Treasury bills, commercial paper, certificates of deposit, call money	Equity shares, preference shares, debentures, bonds
Institutions	RBI, commercial banks, discount houses	Stock exchanges, SEBI, financial institutions, mutual funds
Purpose	Meets working-capital / short-term needs	Meets fixed-capital / long-term investment needs
Risk and return	Low risk, low return	Comparatively higher risk and higher return
Liquidity	Highly liquid	Comparatively less liquid

Basis	Condition	Warranty
Meaning	An essential stipulation, forming the main purpose of the contract	A subsidiary/collateral stipulation, not central to the contract
Importance	Of primary importance	Of secondary importance

Q.(a) Differentiate between money market and capital market (any 5).

(a) Money market versus capital market

(b) Conditions versus warranty

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