Most Important Questions on Money Market

By Saroj Singh|Updated : August 28th, 2021

While preparing for exams, revision is the key to success. So for the aspirants who are preparing for various state exams, here are the Most Important Questions on Capital Market. These questions can be fruitful in the last-minute revision of Capital Market. These questions will help students to fetch more marks in the exams.

Also, Sectional tests help understand the concept better. It is recommended that after you finish every topic or component of the syllabus do solve Questions that are either asked in the previous year papers or given in a mock. This article including only questions is aimed to make you understand and attempt a particular syllabus domain effectively.

This article is important for MPSC State Services Exam and MPSC Combined Exam.


Most Important Questions on Money Market

1. Which among the following statements is correct regarding the Money market?

(a) Money market deals with medium and long-term financial transactions.

(b) Money market promotes working capital finance.

(c) Money market instruments do not provide liquidity.

(d) The Prime regulator of the Money market is IRDA, PFRDA

Answer B

2. Which of the following is NOT a part of India’s Money Market?

(a) Call Money Market

(b) Banks

(c) Mutual funds

(d) Indian Gold Council

Answer D

3. The most volatile part of the Organised Money Market in India is:

(a) Government Security Market

(b) Commercial Bill Market

(c) Call Money Market

(d) Certificate of Deposit Market

Answer C

4. Which of the following is not a Money Market Instrument?

(a) Preference shares

(b) Certificates of Deposit

(c) Treasury Bills

(d) Commercial Paper

Answer A

5. Which if the following is not true of the Money Market?

(a) It is a market for short term loans

(b) The maturity period is anywhere between a day and a year

(c) Treasury Bills are not a component of Money Market

(d) Central Banks take part in Money Market

Answer C

6. Money lent for more than one day but less than 15 days in the money market is known as ____.

(a) Notice Money

(b) Term Money

(c) Call Money

(d) Hot Money

Answer A

7. Money market is a market for

(a) Short term fund

(b) Long term fund

(c) Negotiable instruments

(d) Sale of shares

Answer A

8. Which among the following is not a demerit of the money market?

(a) Absence of all India money market

(b) Diversity of Interest rates

(c) Predominance of the organised sector

(d) Shortage of capital funds

Answer C

9. Who regulates the Money Market?

(a) RBI

(b) SEBI

(c) Finance Ministry

(d) National Securities Depository Limited

Answer A

10. Money market hedge involves:

(a) Going for a forward contract

(b) Going for a future contract

(c) Going for a backward contract

(d) A position to cover a future payables receivable position

Answer D

11. Assertion (A): Money Market is the long-term financial market.

Reason (R): In this market,money is traded between individuals or groups.

(a) Both A and R are true and R is the correct explanation of A

(b) Both A and R are true and R is not the correct explanation of A

(c) A is true but R is false

(d) A is false but R is true

Answer D

12. Corporate securities market, government securities market and long term loan market are the categories of

(a) Capital market

(b) Money market

(c) Financial market

(d) Credit market

Answer A

13. In the money market, the duration of call money loan is:

(a) 1 day

(b) 3 months

(c) 6 months

(d) 270 days

Answer A

14. Assertion(A): There are primarily 2 types of securities market viz capital market and money market.

Reason(R): The capital market deals with old issue securities and new securities are issued in the money market.

(a) Both (A) and (R) are true and (R) is the correct explanation of (A)

(b) Both (A) and (R) are true, but (R) is not the correct explanation of (A)

(c) (A) is true but (R) is false

(d) (A) is false but (R) is true

Answer C

15. Mutual funds in the money market are

(a) portfolios of stocks.

(b) portfolios of short-term assets.

(c) Private sector bonds.

(d) Treasury bills

Answer B  

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