Q.What is a money market? State any four of its features.

The money market is defined by the short maturity of what it trades, and its features follow directly from that basic fact.

The money market is the segment of the financial market where short-term funds — instruments with a maturity of up to one year — are borrowed and lent.

Four of its features:

1. Deals in short-term funds only — instruments here mature anywhere from overnight up to one year, never longer.
2. High liquidity — money-market instruments can be converted into cash quickly, since there is always an active pool of buyers and sellers.
3. Low risk — participants are mostly high-credit-standing institutions (Government, RBI, banks, well-rated corporates), and the short maturity itself limits risk exposure.
4. Regulated mainly by the RBI — under the Reserve Bank of India Act, 1934, the RBI is the principal regulator and operator in this market.

Describing the money market as dealing in shares and debentures — those are capital-market instruments; the money market's instruments (T-Bills, CP, CD, call money) are specifically short-term debt claims.