Q. With reference to the Capital Market, consider the following statements:
1.It deals with the borrowing and lending of funds for a period of less than one year.
2.It caters to the funding needs of medium and long-term projects.
3.It facilitates the mobilization and allocation of long-term funds in the economy.
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:

  • The capital market does not deal with short-term funds (less than one year). That is the role of the money market.
  • The capital market provides a platform for borrowing and lending of medium and long-term funds, typically above one year, making it suitable for infrastructure, industrial, and other long-gestation projects.
  • By channeling long-term funds from savers to borrowers, the capital market facilitates mobilization and efficient allocation of these funds across sectors.

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

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