Exam Tomorrow · Class 12 Business Studies · Chapter 10

Financial Markets Quick Revision

Money market, capital market, stock exchange and SEBI in one clean revision path.

60-second revision

  • A financial market facilitates the creation and exchange of financial assets and links savers with users of funds.
  • Money market deals mainly in short-term funds; capital market deals mainly in medium- and long-term funds and securities.
  • The primary market deals with new securities; the secondary market provides trading in existing securities.
  • SEBI regulates and develops the securities market and protects investors' interests.

Keywords to remember

money market · capital market · primary market · secondary market · stock exchange · SEBI

Common mistakes

  • Primary market does not mean the first stock exchange; it means the market for new issues.
  • Money market = short-term funds; capital market = longer-term funds/securities.

Important questions

  1. Differentiate money market and capital market.
  2. Differentiate primary market and secondary market.
  3. Explain the functions/objectives of SEBI.

Quick MCQ check

Question 1: New securities are issued in the:

  • Primary market
  • Secondary market
  • Commodity market only
  • Foreign exchange market only

Explanation: The primary market is the new-issue market.

Question 2: Treasury bills are associated mainly with the:

  • Money market
  • Primary school market
  • Consumer market
  • Labour market

Explanation: Treasury bills are short-term money-market instruments.

Question 3: SEBI is concerned mainly with:

  • Securities market regulation and investor protection
  • School examinations
  • Agricultural procurement only
  • Income-tax assessment only

Explanation: SEBI regulates and develops India's securities market and protects investors.

Practice Business Studies case studies · Important questions · Timed exam mode