Consider the following markets: 

1. Government Bond Market 

2. Call Money Market 

3. Treasury Bill Market 

4. Stock Market 

How many of the above are included in capital markets? 

(a) Only one 

(b) Only two 

(c) Only three 

(d) All four

Ans: b

Explanation:

The Indian Financial system refers to the borrowing and lending of funds demand for and supply of funds. It consists of two parts

1. Indian Money market and 2. Indian Capital market

The Indian Money market is the market in which short term funds are borrowed and lent.

The Capital market is market for medium and long term funds.

Money Market consists of two parts unorganised and organised sectors. The unorganised sector consists of indigenous bankers and money lenders

Organised money market in India comprises RBI, public sector banks, and private banks (both Indian and Foreign). The organised money market has a number of submarkets such as Call money market, Billmarket, Repos, Certificate of deposits(CDs) and commercial papers(CPs).

Capital Market is the market for long term funds. Capital Market in India comprise of Government

securities Market, Industrial Securities market, Developmental Financial Institutions, Financial

intermediaries like- Merchant banks, Mutual Funds, Leasing companies, Venture capital companies etc.

Hence, option b is correct.

Read: Solved Economy PYQs With Explanation 2023 UPSC Prelims