Foundations Of Finance
Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 2, Problem 1RQ
Summary Introduction

 To discuss: The difference between money and capital market.

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Explanation of Solution

The money market comprises of all organizations and procedures that achieve dealings in short-period debt instruments that are distributed by debtors with (usually) great credit ratings. Instances of securities dealt in the money market comprise country U. Treasury bills, bankers’ acceptances, and commercial paper. Note that all of these are instruments of debt.

Equities are not dealt in the money market. The money market is totally an over-the-counter market. In other sense, the capital market delivers for transactions in long-period financial rights (those rights with maturity time ranging more than one year). The capital market comprises both equity and debt securities. Trades in the capital market can take place on prearranged exchanges or over-the-counter.

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