38.What are capital market instruments? A. Financial institutions B. Securities traded on the stock exchange C. Market regulators D. Bonds and debentures
Question
38.What are capital market instruments? A. Financial institutions B. Securities traded on the stock exchange C. Market regulators D. Bonds and debentures
Solution
Capital market instruments are tools or methods that traders and companies use to raise long-term funds. They include both equity and debt instruments.
Option A: Financial institutions - This is incorrect. Financial institutions like banks, insurance companies, and investment firms are not capital market instruments. They are entities that may participate in the capital market, but they are not instruments themselves.
Option B: Securities traded on the stock exchange - This is partially correct. Securities such as stocks and bonds that are traded on the stock exchange are examples of capital market instruments. However, not all securities are capital market instruments.
Option C: Market regulators - This is incorrect. Market regulators like the Securities and Exchange Commission (SEC) oversee and regulate the capital market, but they are not capital market instruments.
Option D: Bonds and debentures - This is correct. Bonds and debentures are both types of debt securities that companies and governments issue to raise long-term funds. They are examples of capital market instruments.
So, the correct answer to the question "What are capital market instruments?" would be "Securities traded on the stock exchange" and "Bonds and debentures".
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