UNIT 1

1. DEFINE FINANCIAL MARKETS

Ans: • FINANCIAL MARKETS REFERS TO ANY MARKET PLACE WHERE TRADING OF SECURITIES
OCCURS. • EXCHANGE OF CAPITAL AND CREDIT

2. DEFINE MONEY MARKET

Ans: The money marketis a component of the economy which provides short-term funds. The
money market deals in short-term loans, generally for a period of a year or less

3. DEFINE TRESURY BILL

Ans: Treasury bills, also known as T-bills. • The RBI on behalf of the government . • It is a promissory
note with a guarantee of payment at a later date. • 14-day Treasury bill, 91-day Treasury bill 182-day
Treasury bill,364-day Treasury bill

4. Commercial paper

ans: Commercial paper, also called CP, is a shortterm debt instrument issued by companies to raise
funds generally for a time period up to one year

5. Define call rate

Ans: • Call rate is the rate of interest on call loans, which are loans that are due for payment on
demand

6. Define prospectus

• A prospectus is defined as a legal document describing a company’s securities that have been put
on sale. • The prospectus generally discloses the company’s operations along with the purpose of
the securities being offered.

1. DEFINE MONEY MARKET AND CAPITAL MARKET ? DIFFERENCE BETWEEN MONEY MARKET
AND CAPITAL MARKET?

ANS: Capital market is a market where buyers and sellers engage in trade of financial securities like
bonds, stocks, etc. Money market is a component of the economy which provides short-term funds.
The money market deals in short-term loans, generally for a period of a year or less.
 2. DEFINE CAPITAL MARKET?DISTINCTION BETWEEN PRIMARY MARKET AND SECONDARY
MARKET? ANS: •

PAGE NO. 06 • TABLE(PRIMARY AND SECONDARY MARKET)