ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Capital market securities are less liquid and have longer maturities than money market securities. Governments never issue stock because they cannot sell ownership claims. To sell an old bond when rates have risen, the holder will have to discount the bond until the yield to the buyer is the same as the market rate.

Detailed explanation-2: -Maturity date Short-term securities mature in less than a year, medium-term securities mature in 1-3 years, and long-term securities mature in three years or more. The term’s length will impact the price and interest rate given to the investor, as investors demand higher returns for lengthier investments.

Detailed explanation-3: -Money Market securities are less risky compared to Capital Market securities because they are issued for a shorter period and involve lower volatility. Money Markets are highly liquid compared to Capital Markets. Money Market helps in meeting short-term credit requirements of the companies such as working capital etc.

Detailed explanation-4: -A Treasury bond is a long-term debt security issued by the U.S. government with a maturity of 10 to 30 years, paying a fixed interest rate semiannually. A Treasury note is a medium-term debt security issued by the U.S. government with a maturity of two to 10 years.