ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The money market is the component of a financial market that deals with short term borrowings. On the other hand, the capital market is also a component of the financial market that allows long term trading of equity and debt securities. Money markets deal in short term lending, borrowing, buying and selling.

Detailed explanation-2: -These markets are described as “money markets” because the assets that are bought and sold are short term-with maturities ranging from a day to a year-and normally are easily convertible into cash.

Detailed explanation-3: -The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders.

Detailed explanation-4: -A money market is a market where transactions are made in short-term securities or it is meant for those securities where the payment period is up to one year. Since their maturity period is very short, they are also termed as near money.

Detailed explanation-5: -The money market is where short-term financial instruments with a holding period of a year or less are traded. It essentially works as a short-term lending and borrowing platform for its participants, with investors in this market either gaining access to funds or earning interest on them.