[Solved] Which of the following statements about the capital market is correct? — Ans: It provides a mechanism for companies to raise long-term funds through equity... | Financial Awareness

Financial Awareness - Risk, Stability & Emerging Finance

Which of the following statements about the capital market is correct?

AIt only deals with government securities and excludes corporate bonds

BIt is regulated by the Reserve Bank of India

CIt provides a mechanism for companies to raise long-term funds through equity and debt instruments

DIt primarily facilitates short-term borrowing and lending

Step-by-Step Solution

Step 1: Understand the scope of capital market
Capital market includes issuance and trading of equity shares, corporate bonds, and government securities.
Step 2: Analyze options
It only deals with government securities and excludes corporate bonds is incorrect because capital market includes corporate bonds. It is regulated by the Reserve Bank of India is wrong as SEBI regulates capital markets, not RBI. It primarily facilitates short-term borrowing and lending describes money market functions.
Step 3: Confirm correct statement
It provides a mechanism for companies to raise long-term funds through equity and debt instruments correctly states the capital market's role in raising long-term funds through equity and debt instruments.
Final Answer:
It provides a mechanism for companies to raise long-term funds through equity and debt instruments → Option C
Quick Check:
Capital market role = raising long-term funds via equity and debt ✅

Quick Trick: Capital market regulated by SEBI, not RBI.

Common Mistakes:

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