The investment world divides the financial markets into two broad categories: the capital market and the money market. The capital market encompasses sources of financing with time horizons longer than one year – essentially stocks and bonds issued by various institutions to raise money for different purposes. The money market is made up of short-term debt securities that mature in a year or less. It is a vast, "liquid" market in which governments, municipalities, corporations, and other entities finance their short-term cash needs and invest cash positions by buying and selling debt securities.
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