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Questions and Answers
The capital market is where corporations and governments issue financial assets such as bonds and shares to meet their short-term financial needs.
The capital market is where corporations and governments issue financial assets such as bonds and shares to meet their short-term financial needs.
False (B)
The money market is associated with short-dated financial assets, while the capital market deals with long-dated or undated securities.
The money market is associated with short-dated financial assets, while the capital market deals with long-dated or undated securities.
True (A)
The money market is mainly used by the central government to raise finance through new issues of government bonds.
The money market is mainly used by the central government to raise finance through new issues of government bonds.
False (B)
The capital market is primarily used for raising finance by the private sector through new issues of shares and corporate bonds.
The capital market is primarily used for raising finance by the private sector through new issues of shares and corporate bonds.
The capital market and money market both provide short-term financing options for corporations and governments.
The capital market and money market both provide short-term financing options for corporations and governments.
Flashcards
What is the capital market?
What is the capital market?
The capital market is where long-term financial assets like bonds and shares are issued by corporations and governments to raise funds.
What is the money market?
What is the money market?
The money market deals with short-term financial assets, typically with maturities less than a year.
Who uses the capital market?
Who uses the capital market?
The capital market is primarily used by corporations and governments for long-term fundraising.
Who uses the money market?
Who uses the money market?
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What is the difference between the capital and money markets?
What is the difference between the capital and money markets?
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Study Notes
Capital Market: Definition and Instruments
- The capital market is a platform where corporations and governments issue financial assets to meet their medium to long-term financial needs.
- Financial assets issued in the capital market include bonds and shares.
Difference between Money Market and Capital Market
- The capital market provides medium to long-term financing, whereas the money market provides short-term financing.
- The money market is associated with short-dated financial assets, whereas the capital market issues and trades long-dated or undated securities.
Instruments in the Capital Market
- Private sector raises finance through new issues of shares and corporate bonds.
- Central government raises finance through new issues of government bonds (also known as gilts in the UK).
Key Features of the Capital Market
- Issues long-dated or undated financial assets.
- Meets medium to long-term financial needs of corporations and governments.
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Description
Test your knowledge on capital markets with this quiz! Explore the definition, instruments, types, and functions of capital markets. Understand the differences between capital markets and money markets.
