CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking
In India's financial system, the money market is mainly the market for which of the following?
The money market is the market for short-term funds, with instruments maturing in up to one year, such as treasury bills, commercial paper, certificates of deposit and call money. Long-term securities like shares and debentures belong to the capital market, not the money market.
- ALong-term funds with maturity of more than one year, such as debentures and equity shares
- BShort-term funds and instruments with maturity of up to one year, such as treasury bills and commercial paperCorrect
- CForeign currency exchange between the rupee and other currencies only
- DInsurance and pension products sold to households
Explanation
The money market deals in short-term borrowing and lending, generally up to one year. Treasury bills, commercial paper, certificates of deposit and call money are typical instruments. Long-term funds such as debentures and shares are handled by the capital market, so the first option describes the wrong market.
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