Q65. 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?
a. Only one
b. Only two
c. Only three
d. All four
Question from UPSC Prelims 2023 GS Paper
Explanation :
Correct answer : b. Only two
Capital Markets
Capital markets are financial markets where long-term debt or equity-backed securities are bought and sold. They facilitate the raising of capital by connecting investors with businesses or governments that need funds.
Government Bond Market
This is a part of the capital market as government bonds are long-term debt securities issued by the government to raise funds.
Call Money Market
This is not a part of the capital market as call money is short-term finance, usually for one day, used by banks and financial institutions. It is a part of the money market, not the capital market.
Treasury Bill Market
This is not a part of the capital market as treasury bills are short-term debt securities issued by the government with a maturity of less than one year. They are a part of the money market.
Stock Market
This is a part of the capital market as stocks represent equity ownership in a company, and their issuance and trading facilitate the raising of long-term capital for businesses.
Therefore, out of the four markets mentioned, only two (Government Bond Market and Stock Market) are included in capital markets. So the correct answer is: b. Only two