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Chapter 6: Money Market — Online MCQ Test

COMMERCE · CLASS 12th · Tamil Nadu State Board
Practice Chapter 6: Money Market with a free chapter-wise online MCQ test. This chapter covers: This chapter explores short-term financial systems and debt instruments. Students analyze money market participants key differences from capital markets and core instruments like T.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 6: Money Market — Important Questions & Answers

What is the main purpose of the money market?
  • A. To provide long-term capital to companies
  • B. To deal with short-term funds and financial instruments
  • C. To trade only shares and debentures
  • D. To finance fixed assets of businesses
Answer: B. To deal with short-term funds and financial instruments
The money market deals with short-term borrowing and lending, usually for funds needed for up to one year.
Which of the following is a money market instrument?
  • A. Equity shares
  • B. Debentures
  • C. Treasury Bills
  • D. Preference shares
Answer: C. Treasury Bills
Treasury Bills are short-term debt instruments issued by the government and are part of the money market.
The money market mainly provides funds for a period of:
  • A. Less than one year
  • B. More than ten years
  • C. Five to fifteen years
  • D. Only for equity investment
Answer: A. Less than one year
Money market instruments are used for very short-term financial requirements, generally less than one year.
Which of the following best distinguishes the money market from the capital market?
  • A. Money market deals with long-term securities, capital market with short-term funds
  • B. Money market deals with short-term funds, capital market with long-term funds
  • C. Money market deals only with shares, capital market only with bonds
  • D. Money market is regulated, capital market is not regulated
Answer: B. Money market deals with short-term funds, capital market with long-term funds
The key difference is the maturity period: money market instruments are short-term, while capital market instruments are long-term.
Which one of the following is NOT correctly matched?
  • A. Treasury Bills - Government short-term borrowing
  • B. Certificates of Deposit - Issued by commercial banks
  • C. Commercial Bills - Trade credit instrument
  • D. Gilt-edged Securities - Issued by private companies
Answer: D. Gilt-edged Securities - Issued by private companies
Gilt-edged securities are issued by the government, not by private companies.