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

Mr. Arvind Shah asks why the Indian capital market is described as distinct from the money market. Which feature best distinguishes the capital market?

The capital market is distinguished by long-term funding instruments such as equity shares, debentures and long-dated government securities, which have long or no fixed maturity. The money market, by contrast, covers short-term instruments maturing within a year, so the maturity profile is the key difference.

  1. AIt deals in instruments with long-term or no fixed maturity, such as equity shares and long-dated bondsCorrect
  2. BIt deals only in instruments maturing within 91 days
  3. CIt deals only in foreign exchange transactions
  4. DIt deals only in bank deposits

Explanation

The capital market handles long-term funds through equity and long-term debt. The money market handles short-term instruments, generally up to one year. Forex and bank deposits are not defining features of the capital market.

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