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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market

In the Indian securities market, which of the following instruments is typically traded in the money market rather than the capital market?

Treasury bills are money market instruments because they are short-term government securities with maturity of up to one year. Equity shares, ten-year debentures and equity mutual fund units are long-term or perpetual instruments and therefore belong to the capital market.

  1. AEquity shares of a listed company
  2. BTreasury bills issued by the Government of IndiaCorrect
  3. CLong-term corporate debentures with 10-year maturity
  4. DUnits of an equity mutual fund scheme

Explanation

The money market deals in short-term instruments with maturity up to one year, such as treasury bills, commercial paper and certificates of deposit. Equity shares, long-dated debentures and equity fund units are capital market instruments with longer or indefinite horizons.

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