Discuss Forum
1.
Which of the following institution is a major player in the money market?
- A. Stock exchange
- B. Stock exchange
- C. Stock exchange
- D. Stock exchange
Answer: Option B
Explanation:
A commercial bank is a major player in the money market because it actively engages in lending and borrowing short-term funds, which is a key function of the money market. They facilitate transactions between individuals and businesses, allowing them to access funds when needed.
Why other options are incorrect:
Why other options are incorrect:
- Stock exchange: While important for long-term investments, stock exchanges primarily deal with equities (shares) and are not considered primary participants in the money market, which focuses on short-term debt instruments.
- Development bank: Development banks typically focus on providing long-term loans for economic development projects, not the short-term transactions typical of the money market.
- Non-bank financial institution (NBFI): While some NBFIs can participate in the money market, commercial banks are the primary players due to their established role in lending and deposit taking.
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