Class 12 Finance Important Chapter 6 Money Market

Class 12 Finance Important Chapter 6 Money Market Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Finance Important Solutions in English and select need one. AHSEC Class 12 Finance Additional Notes Download PDF. HS 2nd Year Banking Additional Solutions.

Class 12 Finance Important Chapter 6 Money Market

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Banking Additional Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Finance Important Solutions English Medium for All Chapters, You can practice these here.

Money Market

Chapter: 6

IMPORTANT QUESTION AND ANSWER

Short Question and Answer:

1.What is a money market?

Ans: A money market is a financial market for short-term borrowing and lending, typically for periods under one year. It deals with liquid financial instruments like treasury bills, commercial papers, and bills of exchange.

2. What are the main functions of financial markets?

Ans: Financial markets create and allocate credit, provide benefits to lenders and borrowers, serve as intermediaries for fund mobilization, and promote economic development by allocating funds to regions and sectors.

3. What is the difference between money market and capital market?

Ans: The money market deals with short-term funds, while the capital market deals with long-term funds. Money markets focus on instruments like treasury bills and commercial papers, whereas capital markets handle shares, debentures, and bonds.

4. What is a call money market?

Ans: The call money market deals with short-term loans that can be called back by the lender, typically within one to fourteen days. It is mainly used by brokers and dealers to meet their temporary fund requirements.

5. What is collateral loan market?

Ans: In the collateral loan market, loans are provided against collateral such as stocks or bonds. If the borrower fails to repay, the collateral is seized by the lender.

6. What are the sub-markets in the money market?

Ans: The money market consists of sub-markets like call money market, bill market, collateral loan market, and acceptance market, each specializing in different types of short-term financial instruments.

7. Who are the participants in the money market?

Ans: Participants in the money market include commercial banks, the central bank, non-bank financial institutions, bill brokers, and borrowers such as traders, manufacturers, and government institutions.

8. What role do commercial banks play in the money market?

Ans: Commercial banks are the principal suppliers of funds in the money market. They lend money, discount bills, and provide liquidity to trade and industry by making advances.

9. What is the importance of the money market?

Ans: The money market is crucial for financing trade and industry by providing short-term funds. It encourages saving and investment, helps the government manage short-term financial needs, and ensures the stability of the banking system.

10. What are the characteristics of a developed money market?

Ans: A developed money market has a strong central bank, a well-organized banking system, availability of credit instruments, specialized institutions, and an integrated structure with uniform interest rates across the country.

Fill in the Blanks:

1. The financial system of a country functions through financial __________ and financial markets.

Ans: Institutions.

2. Money market deals with the __________ borrowing and lending of funds, generally less than one year.

Ans: Short-term.

3. According to __________, “Money market is a collective name given to the various firms and institutions that deal with the various grades of near-money.”

Ans: Crowther.

4. The __________ defines the money market as “the centre for dealing, mainly of a short-term character, in monetary assets.”

Ans: RBI.

5. Money market deals in __________, short-term government securities, Bankers’ acceptances, etc.

Ans: Bills of exchange.