What are the primary functions of a financial market?

Financial markets serve multiple key functions.

• Connects investors with borrowers.

• Provides important pricing data.

• Ensures secure transactions.

Fill in the blank: The capital market is primarily designed for borrowing ___ and ___ funds.

Medium-term and long-term

True or False: The money market deals directly with cash transactions.

False. The money market does not deal in actual cash but provides a platform for credit instruments.

What distinguishes the primary market from the secondary market?

Primary and secondary markets differ significantly.

• Primary market issues new securities.

• Secondary market trades existing securities.

• Markets serve distinct financial purposes.

Fill in the blank: Key participants in the Indian money market include the Reserve Bank of India (RBI), commercial banks, and ___ banks.

Co-operative

What role does the Securities and Exchange Board of India (SEBI) play in the stock exchanges?

SEBI regulates stock exchanges effectively.

• Implements reforms for transparency.

• Enhances investor protection measures.

• Enforces strict trading requirements.

Fill in the blank: The secondary market includes the ___ market for immediate delivery and the ___ market for future delivery.

Spot; forward

True or False: The capital market only includes the trading of securities and does not involve long-term borrowings from banks.

False. The capital market encompasses long-term borrowings from banks and financial institutions as well as the trading of securities.

What is the significance of liquidity in stock exchanges?

Liquidity enhances market efficiency.

• Facilitates easy buying.

• Supports quick selling.

• Attracts more investors.

Fill in the blank: The money market includes instruments such as treasury bills, commercial paper, and ___ notes.

Promissory