“Money Market is essentially a Mar | Class 12 Business Studies Chapter Financial Markets, Financial Markets NCERT Solutions

Q2.

“Money Market is essentially a Market for short term funds.” Discuss.

Money market is a market where transactions are made in short-term securities or it is meant for those securities where the payment period is upto one year. Since, their maturity period is very short, they are also termed as near money. These securities include call money, treasury bills, commercial bills, certificate of deposit, commercial paper, etc. Short-term financial instruments satisfy the requirement of short-term or working capital needs of commercial establishments.

Features of Money Market are:

  1. The volume of transaction in money market is large that is why it is also called Wholesale market.
  2. The participants of money market are RBI, commercial banks, financial institutions and finance companies.
  3. Impersonal relationship is established among the participants in a money market.
  4. Money markets are highly liquid and have an arrangement for providing liquidity, which is provided by Discount and Finance Houses of India (DFHI).
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Study Tips for Answering NCERT Questions:

NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:

  • Read the question carefully and focus on the core concept being asked.
  • Reference examples and data from the chapter when answering questions about Financial Markets.
  • Review previous year question papers to get an idea of how such questions may be framed in exams.
  • Practice answering questions within the time limit to improve your speed and accuracy.
  • Discuss your answers with your teachers or peers to get feedback and improve your understanding.

Important Questions & Answers

Which NCERT concept is used in this question?

This question is based on core NCERT concepts explained in the chapter and should be revised thoroughly before exams.

Why is this answer important for exams?

This question is important because it tests key concepts from the NCERT syllabus and is frequently asked in CBSE exams.

What is the correct answer to: “Money Market is essentially a Market for short term funds.” Discuss.?

Money market is a market where transactions are made in short-term securities or it is meant for those securities where the payment period is upto one year. Since, their maturity period is very short, they are also terme...

How do you solve “Money Market is essentially a Market for short term funds.” Discuss. step by step?

Step-by-step explanation:
• Money market is a market where transactions are made in short-term securities or it is meant for those securities where the payment period is upto one year
• Since, their maturity period is very short, they are also termed as near money
• These securities include call money, treasury bills, commercial bills, certificate of deposit, commercial paper, etc
• Short-term financial instruments satisfy the requirement of short-term or working capital needs of commercial establishments

What common mistakes should be avoided in this question?

Students often lose marks by skipping steps, writing incomplete explanations, or misunderstanding keywords used in the question.

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