Chapter - 9
Money Market and Capital Market in India
Sr. No. | Name of Chapter |
Q. 1. Complete the following statements :
1) Development financial institutions were established to .............
a) provide short term funds.
b) develop industry, agriculture and other key sectors.
c) regulate the money market.
d) regulate the capital market.
2) Money market faces shortage of funds due to ...........
a) inadequate savings.
b) growing demand for cash.
c) presence of unorganized sector.
d) financial mismanagement.
3) Individual investors have lost confidence in the capital market due to ...........
a) lack of financial instruments.
b) high transaction costs.
c) low returns.
d) financial scams.
4) Commercial banks act as intermediaries in the financial system to ...........
a) make profits
b) accelerate the country's economic growth.
c) mobilize the savings and allocating them to various sectors of the economy.
d) control the credit.
Q. 2. Complete the correlation :
1) Money market : Short term funds :: : Long term funds
2) : Central Bank :: SBI : Commercial Bank
3) Co-operative banks : Organized sector :: Indigenous bankers :
4) Primary market : :: Secondary market : Old issues
Q. 3. Find the odd word :
1) Types of Bank Accounts : Saving a/c, D-mat a/c, Recurring a/c, Current a/c
2) Unregulated Financial intermediates : Mutual fund, Nidhi, Chit fund, Loan Companies
3) Financial Assets : Bonds, Land, Govt. Securities, Derivatives
4) Quantitative Tools : Bank rate, Open market operations, Foreign Exchange rate, Variable reserve ratios
Q. 4. Assertion and Reasoning :
1) Assertion (A) : Money market economizes use of cash
Reasoning (R) : Money market deals with financial instruments that are close substitutes of money
Options : 1) (A) is True, but (R) is False
2) (A) is False, but (R) is True
3) Both (A) and (R) are True and (R) is the correct explanation of (A)
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)
2) Assertion (A) : Regional stock exchanges have witnessed a sharp decline in the volume of trade.
Reasoning (R) : Investors prefer to trade in securities listed in premier stock exchanges like BSE, NSE etc.
Options : 1) (A) is True, but (R) is False
2) (A) is False, but (R) is True
3) Both (A) and (R) are True and (R) is the correct explanation of (A)
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)
3) Assertion (A) : The unorganized sector of the money market lacks transparency.
Reasoning (R) : Activities of the unorganized sector are largely confined to rural areas.
Options : 1) (A) is True, but (R) is False
2) (A) is False, but (R) is True
3) Both (A) and (R) are True and (R) is the correct explanation of (A)
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)
4) Assertion (A) : Foreign exchange management and control is undertaken by commercial banks.
Reasoning (R) : RBI has to maintain the official rate of exchange of rupee and ensure its
stability.
Options : 1) (A) is True, but (R) is False
2) (A) is False, but (R) is True
3) Both (A) and (R) are True and (R) is the correct explanation of (A)
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)
Q. 5. Identify and explain the concepts from the given illustrations :
1) Raghu’s father regularly invests his money in stocks and bonds.
2) Sara makes a monthly contribution to a fund jointly created by her friends. The collected fund is then given to a chosen member through lucky draw.
3) Tina deposited a lumpsum amount of ` 50,000 in the bank for a period of one year.
4) ABC bank provides d-mat facility, safe deposit lockers, internet banking facilities to its customers.
Q. 6. Distinguish between :
1) Money market and Capital market.
2) Demand deposit and Time deposit.
3) Organized sector and Unorganized sector of money market.
Q. 7. Answer the following :
1) Explain the problems faced by the money market in India.
2) Explain the functions of commercial bank.
3) Explain the role of capital market in India.
4) Explain the problems of capital market in India.
Q. 8. Answer in detail :
1) Explain the role of money market in India.
2) Explain the functions of RBI.
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