Question:
Choose the incorrect statement about 'Money market' :
Choose the incorrect statement about 'Money market' :
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Money market questions often test the short-term nature. Remember: "Money" = short, "Capital" = long.
Updated On: Jun 21, 2025
- The main instruments traded in this market are Treasury bills, Trade bills, Commercial paper and Certificates of deposit.
- In this market, transactions entail huge sums of money as the instruments are quite expensive.
- Participation in this market is by and large undertaken by institutional participants such as the Reserve Bank of India, banks, financial institutions and finance companies.
- It deals in medium and long term securities.
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The Correct Option is D
Solution and Explanation
The incorrect statement is about tenure because:
1. Money Market Facts: - Short-term instruments (<1 year) - Examples: ✓ T-bills: 91-364 days ✓ Commercial paper: 15-365 days
2. Capital Market Contrast: - Medium/long-term securities - Bonds, equities, debentures
3. Other Option Verification: - (A) Correct instrument list - (B) True (minimum ₹5 lakh transactions) - (C) Accurate participant profile
Market Purpose: - Provides liquidity management - Facilitates short-term borrowing/lending
Final Answer: (D) It deals in medium and long term securities.
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