Money Market Vs. Capital Market

Money Market is the Financial Market in which funds are borrowed or loaned for short period of time normally less than a year.

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SN	Money Market	Capital Market
a	The financial market in which funds are borrowed or loaned for short periods less than one year.	The financial markets in which funds are borrowed or loaned for long term periods more than one year
b	The instrument of money markets are highly liquid market as securities ie bill of exchange, commercial paper, certificate of deposit and treasury bills(T-Bills)	The instruments of capital markets are less liquid marketable securities ie. Share, debentures or bonds
c	The commercial bank is a focus of the money market	The commercial bank purchase the securities of the stock market as investment
d	Treasury bills are trade in money market	Treasury bonds are trade in capital market.

Primary Market Vs. Secondary Market

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SN	Primary Market	Secondary  Market
a	Market in which corporations raise a new capital are called as primary market	Market in which existing, already outstanding securities are traded among the investors are secondary market
b	The main function of primary market is to make financial capital available to make new investments in building equipments and stock of necessary goods	The main function is to provide liquidity to the investors
c	The transaction of securities is less in the primary market	The transaction of the securities is more in the secondary market
d	The investment bankers perform the role of an primary market	The Nepal Stock Exchange(NEPSE) performs the role of secondary market

Primary Market and Secondary Market

Primary Market: A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors. For example, An investor buys 1000 Shares from Standard Charter Bank at the rate of Rs. 100. 
The primary market is designed for the new issues 

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Secondary Market: A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchange like Nepal Stock Exchange(NEPSE) is Secondary Market. For example, An investor buys 1000 Shares from next investor at the rate of Rs. 500.The secondary market is meant for the trade of existing issues. Stocks and bonds are the two basic capital market instruments used in both the primary and secondary markets. 

Capital Market Instruments

Capital Market Instruments are necessary for generating funds for Companies, Corporations and Sometimes National Governments. These are used by the investors to make a profit out of their respective markets.
There are different types of Capital Market Instruments which are used for Market Trade, they are as follows.  http://www.premsansar.com
a) Stocks
b) Debentures
c) Bonds
d) Foreign Bills
e) Treasury Bonds
f) Fixed Deposits
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Capital Market

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A Capital Market is a market for securities(debt or equity), where business enterprises, firm, companies and governments can raise long term funds. It is defined as a market in which money is provided for periods longer than a year. Simply Capital Market is Long term sources.
Capital Market can be classified in to two types
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a) Primary Market
b) Secondary Market

Points to be considered while investing

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Before making any investment, one must ensure to:

a)     obtain written documents explaining the investment

b)     read and understand such documents

c)     verify the legitimacy of the investment

d)     find out the costs and benefits associated with the investment

e)     assess the risk-return profile of the investment

f)      know the liquidity and safety aspects of the investment

g)     ascertain if it is appropriate for your specific goals

h)    compare these details with other investment opportunities available

i)       examine if it fits in with other investments you are considering or you

j)       have already made

k)     deal only through an authorised intermediary

l)       seek all clarifications about the intermediary and the investment

m)  explore the options available to you if something were to go wrong,

n)    and then, if satisfied, make the investment.

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Meaning of Investment and it differ from speculation?

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Fund used to get additional income is called investment. It is done to increase the value of property or to get extra income. The essential of doings investment is to wait time to get something return from it. In this sense investment is using fund at present to get additional return in future. Generally, investment involves real assets or financial assets. Real assets are tangible, material thing such as building, automobiles, machinery, factories and text books. Whereas financial assets are prices of paper representing an indirect claim to real assets held by someone else there pieces of paper represent debt or equity and stock certificate.

Investment may be defined as he purchased by an individual or institutional investor of financial or real assets that produces a return proportional to the risk assumed over future investment.

Elements of Investment

a)      Return: it is the reward obtained in future for taking risk in the investment at present.

b)      Risk: risk is present in every alternative investment. Uncertainty in return from investment is called risk.

c)      Time: time is another important factory for investment, which offers different courses of action.

Investing verses Speculation

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SN	Investment	Speculation
a	Investment is less risky	Speculation  is more risky
b	Investment is long time horizon	Speculation is short time horizon
c	Investment is done with amount of enough information	Speculation is done with limited information