Q. 2

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

Answer :

Money Market is the market for short term funds. The lending and borrowing of funds in the money market varies from overnight to a year. It is an important part of the financial system as it helps in fulfilling the short term and very short term requirements of finance by organised sectors.


Features of Money Market


a) The transaction volume is large in the money market so it is also called wholesale market.


b) The money market participants are banks, mutual funds, investment institutions and Central Banks.


c) The relationship between the participants in the money market is impersonal.


d) Pure competition exists in the money market.


e) It is a market which finances the short term needs of the funds.


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NCERT - Business Studies Part-II