Question

Which financial market deals in short-term debt instruments and has a maturity period of less than one year?

• A. Capital Market
• B. Money Market
• C. Stock Market
• D. Bond Market

Hint:

Money Market: \[ \text{Maturity} < 1 \text{ year} \] Capital Market: \[ \text{Maturity} > 1 \text{ year} \]

Answer 1

The Correct Option is B

Concept: Financial markets facilitate the transfer of funds between investors and borrowers. They are broadly classified into:
• Money Market
• Capital Market The classification is based mainly on the maturity period of financial instruments.

Step 1: Understand the Money Market.
The Money Market deals in short-term funds and financial instruments having a maturity period of less than one year. Examples include:
• Treasury Bills
• Commercial Paper
• Call Money
• Certificates of Deposit
• Commercial Bills

Step 2: Understand the Capital Market.
The Capital Market deals in medium-term and long-term securities. Examples include:
• Equity Shares
• Preference Shares
• Debentures
• Bonds These generally have a maturity period exceeding one year.

Step 3: Apply the concept.
The question specifically mentions:
• Short-term debt instruments
• Maturity less than one year These characteristics belong to the Money Market. \[ \boxed{\text{Money Market}} \] Hence, the correct answer is: \[ \boxed{\text{Option (B)}} \]