ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Commercial papers, US Treasury Bills, Banker’s Acceptances, and Money market mutual funds are all options of short term investments or financial instruments of the money market. In contrast, the preferred stock forms a long term financial instrument under the capital market.

Detailed explanation-2: -Common stock, preferred stock, and t-bonds have a maturity of greater than 1 year. Thus, they are traded in the capital market. T-bills are short-term debt instruments issued by the U.S Treasury for a term of one year or less. Thus, it is traded in the money market.

Detailed explanation-3: -Stock is a capital market instrument issued by companies to raise capital. It is also known as equity share. Investment in company stocks gives you ownership and voting rights in the company.

Detailed explanation-4: -The most common capital market securities include stocks, bonds, and real estate investment trusts (REITs).

Detailed explanation-5: -A capital market is where individuals and firms borrow funds using shares, bonds, debentures, debt instruments, etc. The most common example is a stock exchange such as NASDAQ, trading shares from different companies amongst investors.