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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market

Kavita Rao, a trainee at a Depository Participant, is asked which of the following is a money market instrument rather than a capital market instrument. Which one is it?

The 91-day treasury bill is the money market instrument. Money market instruments mature within one year, whereas equity shares, ten-year corporate bonds and fifteen-year government securities are long-term or perpetual and therefore belong to the capital market.

  1. ATreasury bill with 91-day maturityCorrect
  2. BEquity share of a listed company
  3. CCorporate bond maturing in 10 years
  4. DGovernment security maturing in 15 years

Explanation

Money market instruments have maturities up to one year; a 91-day treasury bill qualifies. Equity shares, long-term corporate bonds and long-dated government securities are capital market instruments because of their long or perpetual tenure.

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