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1. MONEY AND CAPITAL MARKETS

2. MONEY MARKET
• Financial instruments with high liquidity and very short
maturities are traded.
• Used by participants as a means for borrowing
and lending in the short term, from several days to just
under a year.
• Due to highly liquid nature of securities and their short
term maturities, money market is treated as a safe
place.
• Hence, money market is a market where short term
obligations such as treasury bills and banker’s
acceptances are bought and sold.

3. Benefits of Money Market
• Money markets exist to facilitate efficient transfer of
short-term funds between holders and borrowers of
cash assets.
• For the lender/investor, it provides a good return on
their funds.
• For the borrower, it enables rapid and relatively
inexpensive acquisition of cash to cover short-term
liabilities.

4. Functions of Money Market
• To maintain monetary equilibrium
• To promote economic growth
• To provide help to Trade and Industry
• To help in implementing Monetary Policy
• To help in Capital Formation
• Money market provides non-inflationary sources of
finance to government.

5. Money Market Instruments
• Malaysian Government Treasury Bills (MTB)
• Malaysian Government Securities (MGS)
• Bankers Acceptances (BA)
• Negotiable Instruments of Deposits (NID)
• Repurchase agreements (Repo)
• Cagamas Bond
• Khazanah Bond

6. CAPITAL MARKET
• A market in which individuals and institutions
trade financial securities.
• Markets that trade equity (stocks) and debt (bonds)
instruments with maturities of more than one year (long
term maturity)
• Organizations/institutions in the public and private
sectors also often sell securities on the capital markets in
order to raise funds.

7. Types of Market
– Primary market are markets where firms raise funds
by issuing new securities. This process is called
disintermediation where the funds flow directly
from investors to issuers.
– Secondary market is markets in which financial
instruments already in existence are traded among
lenders.

8. Benefits of Capital Market
• Provide the lubricant between investors and those
needing to raise capital.
• Create price transparency and liquidity. They provide
a safe platform for a wide range of investors to hedge
and speculate.
• Holding different shares or bonds allows an investor
to spread investment risk.
• The secondary market gives important pricing
information that permits efficient use of limited
capital.

9. Functions of Capital Market
• To mobilize resources for investments.
• To facilitate buying and selling of securities.
• To facilitate the process of efficient price
discovery.
• To facilitate settlement of transactions in
accordance with the predetermined time
schedules.
• To promote private enterprises by providing
intermediary services to raise funds for corporate
investment and expansion and in changing the

10. Capital Market Instruments
• Equity – A market that exists between
companies and financial institutions that is
used to raise equity capital for the
companies. Such as ordinary share, preferred
share, common stock and fixed deposits.
• Debt: Instruments that are issued by the
issuers for borrowing monies from the
investors with a defined tenure and mutually

11. MONEY Vs. CAPITAL
Capital Market Money Market
Refers to stock market, A place for short term lending
which refers to trading in and borrowing, typically within
shares and bonds of a year. It deals in short term
companies on recognized debt financing and
stock exchanges. investments.
Anybody can make Individual players cannot invest
investments through a in money market as the value
broker. of investments is large.
High risk and high return More secure
Trading is through recognized Deals are transacted on phone
stock exchanges. or through electronic systems