Capital markets and money markets are both essential components of the broader financial system, but they serve distinct functions in terms of duration, instruments, and participants. Whether you are an individual investor, a company looking to raise funds, or a policymaker managing the economy, knowing the difference between these markets can help inform better financial decisions. What Are Capital Markets? Capital markets are long-term markets where institutions and individuals can trade financial securities like stocks and bonds. The primary purpose of a capital market is to facilitate the raising of long-term capital, providing companies with access to the funding they need to invest for growth or innovation. There are two main segments within the capital market: Equity Markets: This is where stocks (or shares) are issued and traded. Companies sell equity to raise money, offering ownership stakes in return. Investors in equity markets look for capital appreciation, dividends, or a combination of both. For instance, a company like Apple might issue new shares to fund product development or expansion. Debt Markets: This includes bonds and other debt instruments that companies and governments use to borrow