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Question

Difficulty: EasyConcept and Classification of Markets

Which type of market is specifically concerned with the exchange of short-term financial instruments such as Treasury bills and commercial papers?

  1. A
    Capital market
  2. Money marketAnswer
  3. C
    Commodity market
  4. D
    Foreign exchange market

Answer

Money market
The money market is the institution or mechanism through which short-term debt instruments with high liquidity and maturities of less than one year—such as Treasury bills, commercial papers, and call money—are traded.

Step-by-Step Solution

1
Analyze the nature of the listed instruments
Treasury bills and commercial papers are short-term financial assets with maturities under one year
Classification of financial markets depends on the maturity duration of traded instruments
2
Classify the financial market by instrument maturity
The money market is defined as the market for short-term debt instruments and liquidity management
Short-term funds are borrowed and lent exclusively in the money market

Key Concept

Classification of markets by financial instrument maturity
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Topics

Concept and Classification of Markets

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