Consider the following difference(s) between money markets and capital markets:
- While money markets are related to short term funds, capital markets are related to long term funds.
- While treasury bills are money markets instruments, national saving certificates are capital market instruments.
Which of the above statements is/are correct?
Money markets are short term funds with maximum maturity period up to 1 year. Capital markets are long term funds with minimum maturity more than a year.
National Saving Certificates have a lock-in of 5 years and 10 years, and hence cannot be included in money markets.Treasury bills have maximum maturity period of 91 days, 182 days, 273 days or 364 days i.e less than 1 year, and hence they are included under the money markets. Also, note that that money markets increases the short term liquidity in the market whereas; capital markets are mobilisation of savings.
This question is a part of GKToday's Integrated IAS General Studies Module