[Solved] The most volatile part of the Organised Money Market in Indi (2024)

FAQs

[Solved] The most volatile part of the Organised Money Market in Indi? ›

The correct answer is Call Money Market. Call Money Market is the most volatile part of the organised Money Market in India.

The correct answer is FPI. Foreign Portfolio Investment (FPI): FPI involves investing in financial assets such as stocks and bonds in a foreign country. It is considered highly volatile because it is subject to quick inflows and outflows based on market sentiment, economic news, and geopolitical events.

The most active part of the money market is the market for overnight call and term money between banks and institutions and repo transactions.

The interest rate paid on call money loans, known as the call rate, is highly volatile. It is the most sensitive section of the money market and the changes in the demand for and supply of call loans are promptly reflected in call rates.

Commodities. Commodities are typically more volatile than currency and equity markets due to the lower levels of liquidity or trading volume than other asset classes, as well as the constant exposure to weather events and other production issues that might affect supply and demand.

Treasury bills are the most actively traded among all money market instruments. The US Treasury raises significant amounts of funds in the money market through the issue of Treasury bills, which helps the government raise funds to meet short-term expenditures.

The money market is an organized exchange market where participants can lend and borrow short-term, high-quality debt securities with average maturities of one year or less. It enables governments, banks, and other large institutions to sell short-term securities to fund their short-term cash flow needs.

Modern forms of money include paper notes and coins. Rupee is widely accepted as a medium of exchange because: It is authorised by the government of India. The law legalises the use of rupee as a medium of payment and settling the transactions.

What is the most volatile trading instrument? ›

In Forex, GBP/JPY is the most volatile trading pair, on the other hand, Gold metal is too much volatile! Basically, volatile trading instruments are useful for knowledgeable traders since they generate quick movements in market, that means, you'll get your TP so early!

Equities (Stocks): Stocks are often considered one of the most volatile financial assets. Stock prices can fluctuate significantly in response to changes in company performance, market sentiment, economic indicators, geopolitical events, and other factors.

Because money market funds are managed with the goal of providing low volatility and principal stability, these products are often used by investors who want a safe place to store their money in the short term while also earning some interest.

The money market fulfills the borrowing and investment requirements of providers and users of short-term funds, and balances the demand for and supply of short-term funds by providing an equilibrium mechanism. It also serves as a focal point for the central bank's intervention in the market.

RBI (Reserve Bank of India) controls the money market. Money Market is a big segment of the financial market in India where the borrowing and lending function occurs in short-term funds which take place in these markets.

A 'money market instrument' is defined by the RBI to include call or notice money, term money, repo, reverse repo, certificate of deposit, commercial usance bill, commercial paper, and such other debt instrument of original or initial maturity up to one year as the RBI may specify from time to time.

USD/JPY (US Dollar/Japanese Yen):Renowned for its high liquidity and volatility, the USD/JPY pair is heavily influenced by economic data releases from both the United States and Japan. Traders often favor this pair for its frequent price movements and abundant trading opportunities.

The S&P 500 is considered a better reflection of the overall stock market's performance (all sectors) compared to the Nasdaq Composite and the Dow. However, the downside to including more sectors is volatility. Thus, the S&P 500 tends to be more volatile than the Dow.

Bank Nifty vs Nifty 50: volatility

- Nifty 50: Generally exhibits lower volatility due to its diversified nature. - Bank Nifty: Tends to be more volatile because it is concentrated in a single sector, making it more sensitive to sector-specific news and developments.