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CMA Intermediate · Financial Management and Business Data Analytics · Money Market

In the Indian money market, which of the following is a feature that distinguishes it from the capital market?

The Indian money market is distinguished by dealing in short-term instruments with original maturity up to one year, such as T-bills, commercial paper and certificates of deposit. Long-term securities like equity and debentures trade in the capital market, and the RBI is the main regulator of money market.

  1. AIt deals in instruments with original maturity of up to one yearCorrect
  2. BIt deals mainly in equity shares and long-term debentures
  3. CIt is regulated exclusively by SEBI
  4. DIt is meant to raise permanent fixed capital for firms

Explanation

The money market deals in short-term funds and instruments whose original maturity is up to one year, such as treasury bills, commercial paper and certificates of deposit. Equity shares and long-term debentures belong to the capital market. The money market is chiefly regulated by the RBI, not exclusively by SEBI.

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