Correct Option
Capital markets facilitate the raising of long-term funds by companies and governments. These markets deal in financial instruments with a maturity period typically exceeding one year. Based on this definition:
- The Government Bond Market involves the trading of long-term government securities, which are instruments used by the government to borrow for extended periods. Thus, it is a component of the capital market.
- The Stock Market is where equities (shares) of companies are bought and sold. Equities represent ownership in a company and are perpetual instruments, hence falling under the capital market.
Conversely:
- The Call Money Market deals with very short-term interbank borrowings, typically for 1 to 14 days. This makes it a part of the money market, which handles short-term funds.
- The Treasury Bill Market involves the issuance and trading of Treasury Bills, which are short-term debt instruments issued by the government with maturities of 91, 182, or 364 days. These are characteristic instruments of the money market.
Therefore, only the Government Bond Market and the Stock Market from the given list are included in capital markets.
Incorrect Options
- Option (a) is incorrect as it states 'Only one', while two markets (Government Bond Market and Stock Market) are part of the capital market.
- Options (c) and (d) are incorrect because they include the Call Money Market and/or the Treasury Bill Market, which are components of the money market due to their short-term nature, not the capital market.