UPSC Prelims 2023 Question:

Consider the following markets:

1. Government Bond Market
2. Call Money Market
3. Treasury Bill Market
4. Stock Market
   
   

How many of the above are included in capital markets?

Explanation:

• The money market is where short-term debt and lending takes place, usually for one year or less. The capital market is where long-term assets, such as stocks and bonds, are traded. The money market is less risky but also less rewarding than the capital market, which is more volatile but potentially more profitable.
  
  
• Based on this definition, we can see that only two of the above markets are included in the capital market, that is Government Bond Market and the stock market. The other two, Call Money Market and Treasury Bill Market are part of the money market, as they deal with short-term financial instruments.
  
  

Therefore, option (2) is the correct answer. 

Subject: Economics | Financial Sectors and Capital Market