Q. With reference to the Capital Market, consider the following statements:
1.Capital Market participants include only institutional investors and commercial banks.
2.Both individuals and governments can act as borrowers in the capital market.
3.Pension funds and insurance companies act as suppliers of capital in the capital market.
Which of the statements given above is/are correct?
Quarterly-SFG-Jan-to-March
Red Book

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: B
Notes:

Explanation:

  • Capital market participants include both individuals and institutions, not just institutional investors or commercial banks. Hence, the statement is too restrictive.
  • Governments, businesses, and individuals can all act as borrowers by issuing securities to raise funds.
  • Entities like pension funds and insurance companies have surplus capital and thus act as suppliers of capital in the market.

Source- 11th NCERT: Economics: Indian Economic Development and TMH Indian Economy by Ramesh Singh

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