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 : Statement 1: Money market deals with short-term debt instruments.
Statement 2: Money market deals with long-term bonds and shares.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
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