CA Foundation · Business Economics · Money Market
Which statement about the money market is correct?
The money market is a collective term for markets in short-term funds, generally with maturity up to one year. It is not one physical location, it does not mainly deal in long maturities, and it is not limited to retail investors.
- AIt is a single formal place where all deals take place physically
- BIt is a collective term for markets dealing in short-term funds, generally up to one yearCorrect
- CIt deals mainly in securities with maturity above ten years
- DIt is open only to individual retail investors
Explanation
The money market is not one physical place; it is a set of markets and instruments dealing in short-term funds with maturity up to one year. Long maturities belong to the capital market. Participants include banks, institutions and the government, not only retail investors.
Did you get it right without looking?
One question tells you little. A timed set on Money Market shows your real accuracy, how long you take and where you lose marks.
More Money Market questions
- In an economy, money demand is L = 600 − 25r (₹ crore, r in %). Initially the money supply is ₹350 crore. The central bank raises supply to …
- Which one of the following statements about Treasury Bills (T-bills) in India is correct?
- In a money market initially in equilibrium, the central bank keeps the money supply unchanged but the public's demand for money rises at eve…
- Aarav Industries, a highly rated company, issues Commercial Paper of face value ₹5,00,000 for 90 days at a discount, receiving ₹4,85,000 on …
- Which of the following is a selective (qualitative) instrument of credit control rather than a general quantitative tool of the RBI?
- In the RBI's classification of money supply, which of the following correctly defines M1 (narrow money)?