Question : Which of the following statement is correct? Statement 1: The capital market helps in capital formation. Statement 2: It is the nature of the capital market to satisfy the short term financial needs of the Government and the industrial sector.
Option 1: Both are true
Option 2: Both are false
Option 3: Statement 1 is true and statement 2 is false.
Option 4: Statement 1 is false and statement 2 is true.
Correct Answer: Statement 1 is true and statement 2 is false.
Solution : In the capital market transactions are made in the long term securities. It is the nature of the capital market to satisfy the long term financial needs of the Government and industrial sector. It is the nature of the capital market to established the balance between the supply and demand side. The capital market helps capital formation. The increase in the investments in the country is called capital formation. The chief function of the capital market is to provide a platform for the sale and purchase of securities.
Hence, option C is correct.
Question : Which feature of capital market is highlighted in the given statement? Statement: It is the nature the capital market to satisfy the long term financial needs of the government industrial sector.
Option 1: Long term securities
Option 2: Long term financing requirement
Option 3: Creating liquidity
Option 4: None of the above
Question : Case Study 22:
DEF Ltd. is a well-established company planning to expand its global operations through acquisitions.
Question :
To finance its acquisition plans, DEF Ltd. is evaluating short-term financing options. Which money market instrument might it use?
Option 1: Commercial paper
Option 2: Call money
Option 3: Treasury bill
Option 4: Corporate bond
Question : Case Study 5:
LMN Corporation is a multinational conglomerate looking to manage its currency exposure effectively.
If LMN Corporation decides to issue short-term debt to finance its international operations, which money market instrument might it use?
Option 1: Corporate bond
Option 4: Commercial paper
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