Question

19.

The principal differences between capital markets and money markets are that:

Group of answer choices

money and capital markets deal in the same securities, the only difference is term

both markets deal in short-term debt securities; however, capital markets deal also in equity securities which have an indefinite term

money markets deal only in short-term government debt

capital markets deal in long-term debt and equity securities, while money markets deal only in short-term debt



20.

A bank issuing a Certificate of Deposit (CD) to a depositor and then lending the money deposited to a business borrower is an example of a(n):

Group of answer choices

direct transfer from a business to an investor

direct transfer through an investment bank

direct transfer through a financial intermediary

indirect transfer through an investment bank

indirect transfer through a financial intermediary

Answer 1

Ans 19) capital markets deal in long-term debt and equity securities, while money markets deal only in short-term debt

Examples of capitla market securities include debentures, equity shares, preference shares.

Examples of money market instruments include Cartificate of deposit, commercial paper.

Ans 10) indirect transfer through a financial intermediary

Certificate of Deposit (CD) is a short term money market instrument. It is issued at discount to the investor.