CBSE 2025, BS Set 1

Question

Read the following statements carefully:

**Statement I:** Financial market is the market for the creation and exchange of financial assets.

**Statement II:** On the basis of 'maturity of financial instruments traded', financial market is classified into money market and capital market.

In the light of the given statements, choose the correct alternative from the following: A). Statement I is true and Statement II is false. B). Statement I is false and Statement II is true. C). Both Statement I and Statement II are false. D). Both Statement I and Statement II are true.

Edvaya · Accepted Answer

The correct answer is Both Statement I and Statement II are true.. **Both Statement I and Statement II are true.**

**Statement I is TRUE**: A financial market is indeed a marketplace where financial assets (shares, bonds, debentures, etc.) are created (primary market) and exchanged (secondary market).

**Statement II is TRUE**: Financial markets are classified into **Money Market** (short-term instruments, maturity up to 1 year, e.g., T-bills, commercial paper) and **Capital Market** (long-term instruments, maturity over 1 year, e.g., shares, debentures) based on the maturity of the instruments traded.

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Business Studies > Business Finance > Financial Markets

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