ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It involves low market risk.
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It is situated at specific locations.
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Deals in unsecured and short-term debt instruments.
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The instruments traded are highly liquid.
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Detailed explanation-1: -Mutual Funds is not a part of Money Market.
Detailed explanation-2: -Detailed Solution. Important Points Statement 1: Non-Banking Finance Companies (NBFCs) are financial institutions that constitute organised component of money market. This statement is incorrect because : NBFCs are financial institutions that are not organised components of the money market.
Detailed explanation-3: -The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. It has no physical locations.
Detailed explanation-4: -They have the maturity period of less than one year. Treasury bills, repurchase agreement and commercial paper all are short term investments and have a maturity level of less than one year. Hence, shares and bonds having maturity of more than one year are not considered as money market instrument.