Q. 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?
Answer:
Only two
Notes: Call Money Market and
Treasury Bill Market belong to the
money market, while the
Government Bond Market and
Stock Market are part of the
capital market.
Money Market Instruments:
- Treasury Bills: Risk-free, issued by the central bank.
- Certificates of Deposit: Receipts for deposited funds.
- Commercial Paper: Unsecured promissory notes with higher returns.
- Repurchase Agreements: Short-term loans involving resale.
- Banker’s Acceptance: Future payment guarantees by banks.
Capital Market Instruments:
- Equities: Company shares.
- Debt Securities: Interest-bearing financial assets.
- Derivatives: Value depends on underlying assets.
- Exchange-Traded Funds (ETFs): Investor-pooled funds for capital market instruments.
- Foreign Exchange Instruments: Currency agreements and derivatives.