Question

Describe the types of markets on the basis of subject of exchange.

Answer 1

1. Capital Market: The capital market is a financial market where long-term funds are raised and traded. It deals with financial instruments such as shares, debentures, bonds and other long-term securities. These instruments generally have a maturity period of more than one year. The capital market helps businesses raise long-term capital and supports industrial and economic development.
2. Money Market: The money market is a market where short-term financial instruments are traded. These instruments have a maturity period of less than one year and are highly liquid. Examples include Treasury Bills, Commercial Papers and Certificates of Deposit. The money market helps businesses and the government meet their short-term financial needs and maintain liquidity in the economy.
3. Commodity Market: The commodity market is a market where physical goods or raw materials are bought and sold. These commodities include agricultural products (like wheat, rice, and sugar), metals (like gold, silver, and copper), and energy resources (like crude oil and natural gas). The commodity market helps producers and traders discover fair prices and facilitates smooth distribution of goods.