Q.Distinguish between the primary market and the secondary market.

Money market : Short-term funds :: Capital market : Long-term funds.

The Indian financial market is divided by the duration of the funds it handles:

• The money market deals in short-term funds, normally for periods up to one year, through instruments like treasury bills, call money and commercial paper.

• The capital market deals in medium- and long-term funds, for periods exceeding one year, through shares, debentures and bonds, and is the market for the country's long-term investment needs.

The correct answer is to develop industry, agriculture and other key sectors.

Development Financial Institutions (DFIs) — such as IDBI, IFCI, ICICI, NABARD and SIDBI — were established mainly to provide long-term finance and promotional support for the growth of industry, agriculture, small-scale units and other priority sectors that ordinary commercial banks (which mostly lend short-term) could not adequately serve. Regulating the money or capital market is the role of the RBI and SEBI, not of the DFIs.

The odd word out is Land. Bonds, government securities and derivatives are financial assets (claims on money/value); land is a tangible real asset. Odd one: Land.

Why: Assets are broadly of two kinds:

• Financial assets — paper or electronic claims that represent a right to money or income, such as bonds, government securities, shares and derivatives. They can be bought and sold in financial markets.
• Real (physical) assets — tangible items like land, buildings, machinery and gold, whose value comes from their physical existence and use.

Since land is a physical/real asset rather than a claim traded in the financial market, it does not belong with the financial assets and is the odd word.