Question : Statement 1: Capital market instruments have maturities ranging from a few days to one year.
Statement 2: Capital market instruments are used for long-term financing.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
Correct Answer:
Statement 1 is true, but statement 2 is false.
Solution : The correct answer is (b) Statement 1 is true, but statement 2 is false.
Statement 1 is false. Capital market instruments typically have maturities longer than one year. Short-term instruments typically with maturities less than a year are usually associated with the money market.
Statement 2 is true. Capital market instruments, such as stocks and bonds, are indeed used for long-term financing. These instruments are used to raise capital for periods typically longer than one year.
