Question : Which of the following is a key function of the primary dealer in the money market?
Option 1: Facilitating foreign exchange transactions
Option 2: Buying and selling securities on behalf of investors
Option 3: Assisting the government in managing public debt
Option 4: Regulating the trading of commodity futures
Correct Answer: Assisting the government in managing public debt
Solution : The correct answer is (c) Assisting the government in managing public debt.
A key function of a primary dealer in the money market is to assist the government in managing public debt. Primary dealers are financial institutions that have a direct relationship with the government and play a crucial role in the government securities market. Primary dealers act as intermediaries between the government and investors in the primary market for government securities. They participate in government debt auctions, purchase government securities directly from the government, and subsequently distribute and trade these securities in the secondary market.
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