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Question

Money market is a market for ___ (1) ___ funds having maturity of ___ (2) ___.

A (1) – short term; (2) – one year or less Correct Answer Incorrect Answer
B (1) – long term; (2) – over 5 years Correct Answer Incorrect Answer
C (1) – medium term; (2) – between 1 to 3 years Correct Answer Incorrect Answer
D (1) – absolute short term; (2) – between 3 to 6 months Correct Answer Incorrect Answer

Solution

The money market is a financial market that deals with short-term borrowing and lending of funds. It primarily caters to the borrowing and lending needs of financial institutions, corporations, governments, and other large entities with short-term liquidity requirements. The instruments traded in the money market have a maturity of typically one year or less, making them suitable for short-term investments and financing needs. Examples of money market instruments include Treasury bills, commercial paper, certificates of deposit, and repurchase agreements (repos).

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