Financial Markets Test - 5

The Securities and Exchange Board of India is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 30 January 1992 through the SEBI Act, 1992.

SEBI is not a participant in money market. The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. In April 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.

Capital Market is a market dealing in medium and long-term funds. It is an institutional arrangement for borrowing medium and long-term funds and which provides facilities for marketing and trading of securities.

The Reserve Bank of India is India's central banking institution, which controls the monetary policy of the Indian rupee. RBI is not a part of capital market.

The instruments traded (media of exchange) in the capital market are:

• Debt Instruments.
• Equities (also called Common Stock)
• Preference Shares.
• Derivatives.

TYPES OF MONEY MARKET INSTRUMENTS

• Treasury Bills. Treasury bills (T-bills) are short-term notes issued by the U.S. government.
• Federal Agency Notes.
• Short-Term Tax Exempts.
• Certificates of Deposit.
• Commercial Paper.
• Bankers' Acceptances.
• Repurchase Agreements.

Money market instrument enjoy a higher degree of liquidity. A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded.

The money market yield will be lower than the yield on stocks and bonds because of the low risk.

A treasury bill is an instrument of short term debt. Treasury bills are sold with maturities of four, thirteen, twenty-six and fifty-two weeks.

A zero-coupon bond, also known as an "accrual bond," is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.