Question
Download Solution PDFWhich one of the following is false with respect to interest rate structure in the Indian money market?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Call rates under normal liquidity conditions are the cap rate for the term money market.
Key PointsThe money market is a market for short-term financial assets which can be turned over quickly at low cost. It provides an avenue for equilibrating the short-term surplus funds of lenders and the requirements of borrowers.
Additional InformationDistinction between Money Market and Capital Market
| Basis | Money Market | Capital Market |
| Maturity of Instruments | 1 year or less | More than 1 year |
| Risks | Less | More and varied |
| Instruments | Treasury bills, CDs, etc | Shares, bonds, etc |
| Finance | Short term | Long term |
| Relation with Central Bank | Direct | Indirect |
Last updated on Jun 12, 2025
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