(1) Money Market

• Dealing with short-term securities that have a life of one year or less.

• These securities are very liquid hence easily converted into cash

• Plays a critical role in balancing surplus and shortage of funds amongst banks after the cheques are cleared. Enable banks to convert a portion of their cash reserves into assets that generate returns.

• Also facilities corporations to obtain short-term loan and investment in banker’s acceptance, money-market funds, certificate of deposits,etc

• Money market is simply the activity transactions mainly by telephone and without any meeting place.

(2) Capital Market

• Markets where securities have a life of more than one year. Examples of long term securities are common stocks, preference stock and bonds.

• Involves in getting long-term funding for national development, capital investments and others.