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Investment classifications differ according to their objectives. Classification based on time standard is the most important one (investment term). Therefore, the market where short-term investment instruments are traded, and has a maturity of less than one year, is called the money market. Contrary to the speculator, when the investor makes a decision to buy or sell, he looks at the company’s power and performance as well as its price and how it changed over a reasonable period. He also figures out the future performance assumptions based on the company’s past.

On the other hand, a market with investment instruments that has a maturity of more than one year are called the capital market. Debt instruments, deposits and other banknotes which have terms of one year or less are considered one of the investment instruments in the money market. Shares, however, are considered one of the capital market instruments because they do not have a specific term.

Returns vary according to the classification of the investment term. The longer the term, the higher the potential return. This makes the term component one of the investment decision making determinants.

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