Question

Which financial market deals in short-term funds and financial instruments having maturity period less than one year?

• A. Capital Market
• B. Money Market
• C. Commodity Market
• D. Foreign Exchange Market

Hint:

Remember: \[ \text{Money Market} \Rightarrow \text{Short-term funds} \] \[ \text{Capital Market} \Rightarrow \text{Long-term funds} \]

Answer 1

The Correct Option is B

Concept:
Financial markets are institutional arrangements where financial assets and securities are traded. Financial markets are broadly classified into:
• Money Market
• Capital Market Money Market deals in short-term funds and securities with maturity period up to one year.

Step 1: Understanding Money Market.
Money Market is a market for:
• Short-term borrowing
• Short-term lending
• Highly liquid financial instruments Examples include: \[ \text{Treasury Bills, Commercial Papers, Call Money} \] These instruments generally mature within: \[ 1 \text{ year} \]

Step 2: Understanding Capital Market.
Capital Market deals in:
• Long-term securities
• Shares
• Debentures
• Bonds Thus Capital Market is not the correct answer.

Step 3: Analyzing options carefully.

• Capital Market deals with long-term funds.
• Money Market deals with short-term funds.
• Commodity Market deals with goods and commodities.
• Foreign Exchange Market deals with currencies. Therefore the correct answer is: \[ \boxed{\text{Money Market}} \]