Consider the following markets:
1. Government Bond Market
2. Call Money Market
3. Treasury Bill Market
4. Stock Market
How many of the above are included in capital markets?
[amp_mcq option1=”Only one” option2=”Only two” option3=”Only three” option4=”All four” correct=”option2″]
1. **Government Bond Market:** Government bonds (like G-Secs) are typically issued with maturities ranging from 1 year to 30 years or even more. These are long-term debt instruments, making the government bond market a part of the **capital market**.
2. **Call Money Market:** This is a market where banks lend to and borrow from each other for very short periods, typically overnight or up to 14 days, to meet their reserve requirements. This is a part of the **money market**.
3. **Treasury Bill Market:** Treasury Bills (T-Bills) are short-term debt instruments issued by the government with maturities of less than one year (currently 91, 182, and 364 days in India). The T-Bill market is a part of the **money market**.
4. **Stock Market:** The stock market deals with equity shares, which represent ownership in a company. Shares are perpetual instruments and represent long-term capital for the company. The stock market is a part of the **capital market**.
Based on this classification, the Government Bond Market (1) and the Stock Market (4) are included in capital markets. This is a total of two markets.
– Money markets deal with short-term financial instruments (debt ≤ 1 year).
– Government Bonds and Stocks are long-term instruments traded in capital markets.
– Call Money and Treasury Bills are short-term instruments traded in money markets.