Previous Year Question
Consider the following markets:
Government Bond Market
Call Money Market
Treasury Bill Market
Stock Market
How many of the above are included in capital markets?
Only one
Only two
Only three
All four
Correct Answer: B
Detailed Solution
The capital market primarily deals with medium- and long-term funds through debt and equity instruments.
Market | Classification | Reason |
Government Bond Market | Capital market | Government bonds or dated Government Securities generally have an original maturity of one year or more. |
Call Money Market | Money market | Call money is an unsecured, extremely short-term loan, generally provided overnight. |
Treasury Bill Market | Money market | Treasury Bills in India have maturities of 91 days, 182 days and 364 days. |
Stock Market | Capital market | It facilitates transactions in equity or ownership securities issued by companies. |
Although Treasury Bills are issued by the Government, this alone does not make them capital-market instruments. They are classified as money-market instruments because of their short maturity.
Therefore, only the following two are included in the capital market:
Government Bond Market
Stock Market