Question:
Statement-I: Capital market instruments are safer than money market instruments both with respect to returns and principal repayment.
Statement - II: The capital market deals in medium and long-term securities such as equity shares and debentures etc.
Choose the correct option from the following:
Statement-I: Capital market instruments are safer than money market instruments both with respect to returns and principal repayment.
Statement - II: The capital market deals in medium and long-term securities such as equity shares and debentures etc.
Choose the correct option from the following:
Statement - II: The capital market deals in medium and long-term securities such as equity shares and debentures etc.
Choose the correct option from the following:
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Remember: Money market = Short-term, Low risk, Low return. Capital market = Long-term, High risk, High return.
Updated On: Jun 25, 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 true.
- Both Statement I and Statement II are false.
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The Correct Option is B
Solution and Explanation
Step 1: Concept
Comparison of Money Market and Capital Market.
Step 2: Meaning
The financial market is divided based on maturity; the money market handles short-term funds, while the capital market handles medium and long-term funds.
Step 3: Analysis
• Statement I claims capital market instruments are safer. This is incorrect. Money market instruments are generally safer because of their short duration (less than a year) and the financial soundness of their issuers (like RBI, banks, large corporations). Capital market instruments involve higher risk of default and price volatility.
• Statement II correctly defines the capital market, as it is indeed a market for medium and long-term debt and equity instruments (like shares and debentures).
Step 4: Conclusion
Statement I is fundamentally incorrect regarding risk, whereas Statement II is a factually correct definition.
Final Answer: (B)
Comparison of Money Market and Capital Market.
Step 2: Meaning
The financial market is divided based on maturity; the money market handles short-term funds, while the capital market handles medium and long-term funds.
Step 3: Analysis
• Statement I claims capital market instruments are safer. This is incorrect. Money market instruments are generally safer because of their short duration (less than a year) and the financial soundness of their issuers (like RBI, banks, large corporations). Capital market instruments involve higher risk of default and price volatility.
• Statement II correctly defines the capital market, as it is indeed a market for medium and long-term debt and equity instruments (like shares and debentures).
Step 4: Conclusion
Statement I is fundamentally incorrect regarding risk, whereas Statement II is a factually correct definition.
Final Answer: (B)
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