HKICPA QP Module 7 Financial Management Practice Questions - HKICPA Qualification Programme Associate Level Module 7 Financial Management (Hong Kong) Exam

Which of the following describes the key distinction between money markets and capital markets?

Money markets trade short-term debt instruments with maturities of one year or less, while capital markets trade long-term debt and equity securities. Money markets trade primary market issuances only, while capital markets facilitate secondary market trading. Money markets are regulated by the Securities and Futures Commission (SFC), whereas capital markets are regulated exclusively by the Hong Kong Monetary Authority (HKMA). Money markets are accessible only to retail investors, whereas capital markets are restricted to institutional participants.

Correct Answer:

Money markets trade short-term debt instruments with maturities of one year or less, while capital markets trade long-term debt and equity securities.

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