Which of the following is a segment of the money market? A. Foreign exchange market B. Stock market C. Real estate market D. Commodity market
Question
Which of the following is a segment of the money market? A. Foreign exchange market B. Stock market C. Real estate market D. Commodity market
Solution
The money market is a segment of the financial market in which financial instruments with high liquidity and short maturities are traded. The money market is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year.
Among the options you provided:
A. Foreign exchange market: This is a global decentralized or over-the-counter market for the trading of currencies. This market determines foreign exchange rates for every currency.
B. Stock market: This is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses.
C. Real estate market: This pertains to the buying, selling, and renting of property or land.
D. Commodity market: This is a physical or virtual marketplace for buying, selling, and trading raw or primary products.
None of the options you provided are segments of the money market. The money market typically includes treasury bills, commercial paper, bankers' acceptances, deposits, certificates of deposit, bills of exchange, repurchase agreements, federal funds, and short-lived mortgage- or asset-backed securities.
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