Question:
Read the following statements carefully :
Statement I : Financial market is the market for the creation and exchange of financial assets.
Statement II : On the basis of “maturity of financial instruments traded”, financial market is classified into money market and capital market.
In the light of the given statements, choose the correct alternative from the following :
Read the following statements carefully :
Statement I : Financial market is the market for the creation and exchange of financial assets.
Statement II : On the basis of “maturity of financial instruments traded”, financial market is classified into money market and capital market.
In the light of the given statements, choose the correct alternative from the following :
Show Hint
Check each statement against the meaning of a financial market and its classification by maturity into money and capital market.
Updated On: Nov 11, 2026
- Statement I is true and Statement II is false.
- Statement I is false and Statement II is true.
- Both Statement I and Statement II are false.
- Both Statement I and Statement II are true.
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The Correct Option is D
Solution and Explanation
Step 1: Understand the task:
We must decide whether each statement is true or false and then choose the matching option.
The topic is the meaning and classification of the financial market.
Step 2: Check Statement I:
A financial market is the market for the creation and exchange of financial assets such as shares, bonds and debentures. It also helps money flow from savers to borrowers.
The statement matches this meaning. So Statement I is TRUE.
Step 3: Check Statement II:
The financial market can be classified in many ways. One way is by the maturity of the instruments traded. Instruments of up to one year belong to the money market. Longer-term instruments belong to the capital market.
So the classification on this basis is money market and capital market. Statement II is TRUE.
Step 4: Match with the options:
(A) says I true, II false. This is wrong because II is true.
(B) says I false, II true. This is wrong because I is true.
(C) says both false. This is wrong because both are true.
(D) says both true. This matches our result.
Final Answer:
Both statements are true, so the correct choice is option (D).
We must decide whether each statement is true or false and then choose the matching option.
The topic is the meaning and classification of the financial market.
Step 2: Check Statement I:
A financial market is the market for the creation and exchange of financial assets such as shares, bonds and debentures. It also helps money flow from savers to borrowers.
The statement matches this meaning. So Statement I is TRUE.
Step 3: Check Statement II:
The financial market can be classified in many ways. One way is by the maturity of the instruments traded. Instruments of up to one year belong to the money market. Longer-term instruments belong to the capital market.
So the classification on this basis is money market and capital market. Statement II is TRUE.
Step 4: Match with the options:
(A) says I true, II false. This is wrong because II is true.
(B) says I false, II true. This is wrong because I is true.
(C) says both false. This is wrong because both are true.
(D) says both true. This matches our result.
Final Answer:
Both statements are true, so the correct choice is option (D).
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