Question : The money market deals with the trading of:
Option 1: Stocks and bonds
Option 2: Currencies and commodities
Option 3: Short-term debt instruments
Option 4: Long-term government securities
Correct Answer: Short-term debt instruments
Solution : The correct answer is (c) Short-term debt instruments.
The money market is a component of the financial market that deals with short-term borrowing and lending of funds. It focuses on highly liquid, low-risk, and short-term debt instruments. These instruments typically have maturities of one year or less. The money market provides a platform for participants to engage in the trading of these short-term debt instruments.
Examples of short-term debt instruments traded in the money market include Treasury bills, certificates of deposit (CDs), commercial paper, repurchase agreements (repos), and short-term government bonds.
Question : What is the main function of the primary market?
Option 1: Trading of existing securities
Option 2: Issuing new securities
Option 3: Trading of foreign currencies
Option 4: Facilitating short-term borrowing and lending
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